The hallmark of type 2 diabetes, the most common metabolic disorder, is a defect in insulin-stimulated glucose transport in peripheral tissues. Although a role for phosphoinositide-3-kinase (PI3K) activity in insulin-stimulated glucose transport and glucose transporter isoform 4 (Glut4) translocation has been suggested in vitro, its role in vivo and the molecular link between activation of PI3K and translocation has not yet been elucidated. To determine the role of PI3K in glucose homeostasis, we generated mice with a targeted disruption of the gene encoding the p85alpha regulatory subunit of PI3K (Pik3r1; refs 3-5). Pik3r1-/- mice showed increased insulin sensitivity and hypoglycaemia due to increased glucose transport in skeletal muscle and adipocytes. Insulin-stimulated PI3K activity associated with insulin receptor substrates (IRSs) was mediated via full-length p85 alpha in wild-type mice, but via the p50 alpha alternative splicing isoform of the same gene in Pik3r1-/- mice. This isoform switch was associated with an increase in insulin-induced generation of phosphatidylinositol(3,4,5)triphosphate (PtdIns(3,4,5)P3) in Pik3r1-/- adipocytes and facilitation of Glut4 translocation from the low-density microsome (LDM) fraction to the plasma membrane (PM). This mechanism seems to be responsible for the phenotype of Pik3r1-/- mice, namely increased glucose transport and hypoglycaemia. Our work provides the first direct evidence that PI3K and its regulatory subunit have a role in glucose homeostasis in vivo.