Previous work has shown that the Simian Virus 40 T antigen (T antigen) cannot transform mouse embryo fibroblasts (MEFs) that do not express the type 1 insulin-like growth factor receptor (IGF-IR). We have now investigated the mechanism(s) by which the transforming activity of T antigen is affected by IGF-IR signaling. We demonstrate that transformation by T antigen of MEFs and several other cell lines requires an insulin receptor substrate-1 (IRS-1) phosphorylated on tyrosines. If IRS-1 is not expressed, or is serine phosphorylated or otherwise inactive, T antigen fails to transform cells in culture. For instance, while T antigen cannot transform 32D myeloid cells (that do not express IRS-1), its transforming activity is restored by the expression of a wild-type IRS-1, but not of an IRS-1 mutated at the PI3K binding sites. The importance of IRS-1 activation of PI3K in T-antigen transformation is supported by the finding that a constitutively activated p110 subunit of PI3K, a target of IRS-1, overcomes the inability of T antigen to transform MEFs with a serine phosphorylated IRS-1. Taken together, these results indicate that the IRS-1/PI3K signaling is one of the mechanisms regulating transformation by the SV40 T antigen. We propose that the requirement for a tyrosyl-phosphorylated IRS-1 provides a mechanism to explain the failure of T antigen to transform MEFs with deleted IGF-IR genes.