Incubation of cells with insulin leads to a transient rise in Tyr phosphorylation of insulin receptor substrate (IRS) proteins, accompanied by elevation in their Ser(P)/Thr(P) content and their dissociation from the insulin receptor (IR). Wortmannin, a phosphatidylinositol 3-kinase inhibitor, selectively prevented the increase in Ser(P)/Thr(P) content of IRS-1, its dissociation from IR, and the decrease in its Tyr(P) content following 60 min of insulin treatment. Four conserved phosphorylation sites within the phosphotyrosine binding/SAIN domains of IRS-1 and IRS-2 served as in vitro substrates for protein kinase B (PKB), a Ser/Thr kinase downstream of phosphatidylinositol 3-kinase. Furthermore, PKB and IRS-1 formed stable complexes in vivo, and overexpression of PKB enhanced Ser phosphorylation of IRS-1. Overexpression of PKB did not affect the acute Tyr phosphorylation of IRS-1; however, it significantly attenuated its rate of Tyr dephosphorylation following 60 min of treatment with insulin. Accordingly, overexpression of IRS-1(4A), lacking the four potential PKB phosphorylation sites, markedly enhanced the rate of Tyr dephosphorylation of IRS-1, while inclusion of vanadate reversed this effect. These results implicate a wortmannin-sensitive Ser/Thr kinase, different from PKB, as the kinase that phosphorylates IRS-1 and acts as the feedback control regulator that turns off insulin signals by inducting the dissociation of IRS proteins from IR. In contrast, insulin-stimulated PKB-mediated phosphorylation of Ser residues within the phosphotyrosine binding/SAIN domain of IRS-1 protects IRS-1 from the rapid action of protein-tyrosine phosphatases and enables it to maintain its Tyr-phosphorylated active conformation. These findings implicate PKB as a positive regulator of IRS-1 functions.