We previously reported (Rani, M. R., Asthagiri, A. R., Singh, A., Sizemore, N., Sathe, S. S., Li, X., DiDonato, J. D., Stark, G. R., and Ransohoff, R. M. (2001) J. Biol. Chem. 276, 44365-44368) that IFN-beta induction of beta-R1 in fibrosarcoma cells required transcription factors ISGF-3 and NF-kappa B. IFN-beta treatment did not augment the abundance of NF-kappa B, but led to phosphorylation of the NF-kappa B subunit p65 and induced a nuclear activity capable of phosphorylating a p65-GST fusion construct in the carboxy-terminal transactivation domain (TAD), residues 354-551. We now present evidence for the involvement of phosphoinositide 3-kinase (PI3K) in this pathway. Pretreatment of HT1080-derived fibrosarcoma cells with pharmacological inhibitors of PI3K (wortmannin or LY294002) selectively inhibited IFN-beta-induced beta-R1 mRNA accumulation in a dose-dependent manner. In stably transfected cell lines, bovine p85, the regulatory subunit of PI3K, functioned as a dominant-negative inhibitor of interferon (IFN) signaling via PI3K and selectively suppressed IFN-beta-mediated induction of beta-R1. Overexpression of PTEN (phosphatase and tensin homologue mutated on chromosome ten), an antagonist of PI3K, blocked induction of a beta-R1 promoter-reporter construct. Studies with PTEN mutants suggested that the lipid kinase activity of PI3K was essential for IFN-beta-induced transcription of beta-R1. Consistent with this finding, a dominant-negative mutant of the serine-threonine kinase Akt, a downstream effector of PI3K, selectively blocked IFN-beta-mediated induction of the beta-R1 promoter reporter. Furthermore, IFN-beta-mediated phosphorylation of GST-p65 was blocked by pretreatment with LY294002. These data suggest that IFN-beta acts through PI3K to enhance the transactivation competence of NF-kappa B complexes through phosphorylation of p65 within the TAD. The results provide novel insight into the role of PI3K in the transcriptional response to IFN-beta.