The phosphatidylinositol-3-OH-kinase (PI(3)K) effector protein kinase B regulates certain insulin-responsive genes, but the transcription factors regulated by protein kinase B have yet to be identified. Genetic analysis in Caenorhabditis elegans has shown that the Forkhead transcription factor daf-16 is regulated by a pathway consisting of insulin-receptor-like daf-2 and PI(3)K-like age-1. Here we show that protein kinase B phosphorylates AFX, a human orthologue of daf-16, both in vitro and in vivo. Inhibition of endogenous PI(3)K and protein kinase B activity prevents protein kinase B-dependent phosphorylation of AFX and reveals residual protein kinase B-independent phosphorylation that requires Ras signalling towards the Ral GTPase. In addition, phosphorylation of AFX by protein kinase B inhibits its transcriptional activity. Together, these results delineate a pathway for PI(3)K-dependent signalling to the nucleus.