Jaagsiekte sheep retrovirus (JSRV) is the causative agent of ovine pulmonary adenocarcinoma, a transmissible lung cancer of sheep. The envelope of JSRV may have oncogenic properties, since it can morphologically transform mouse NIH 3T3 cells and other fibroblast lines. Recently, we found that the cytoplasmic tail of the envelope transmembrane (TM) protein is necessary for transformation, and in particular a consensus binding motif (YXXM) for phosphatidylinositol 3-kinase (PI3K) is important. Moreover, JSRV-transformed cells show phosphorylation (activation) of Akt/protein kinase B, a downstream target of PI3K. In these studies, we directly tested for the involvement of PI3K in transformation by JSRV. Contrary to expectations, four different experiments indicated that PI3K is not necessary for JSRV-induced transformation: (i) cotransfection with a dominant negative truncated form of the PI3K regulatory subunit (Deltap85) did not affect transformation frequency, (ii) cells stably expressing Deltap85 showed the same frequencies of transformation as parental NIH 3T3 cells, (iii) fibroblasts established from double-knockout mice lacking PI3K p85alpha and p85beta could be transformed with JSRV envelope, and (iv) incubation of cells with the PI3K inhibitor LY294002 did not specifically inhibit transformation, nor did the drug reverse transformation of JSRV-transformed cells. One alternate explanation for the lack of transformation by YXXM mutants could be that they were defective in intracellular trafficking. However, confocal microscopy of epitope-tagged envelope proteins of both wild-type and nontransforming YXXM mutants showed a cell surface or plasma membrane localization. While PI3K is not required for JSRV-induced transformation of NIH 3T3 cells, the downstream target Akt kinase was found to be activated (phosphorylated) in JSRV-transformed PI3K-negative cells. Therefore, JSRV envelope can induce PI3K-independent phosphorylation of Akt.