Currently, a central question in biology is how signals from the cell surface modulate intracellular processes. In recent years phosphoinositides have been shown to play a key role in signal transduction. Two phosphoinositide pathways have been characterized, to date. In the canonical phosphoinositide turnover pathway, activation of phosphatidylinositol-specific phospholipase C results in the hydrolysis of phosphatidylinositol 4,5-bisphosphate and the generation of two second messengers, inositol 1,4,5-trisphosphate and diacylglycerol. The 3-phosphoinositide pathway involves protein-tyrosine kinase-mediated recruitment and activation of phosphatidylinositol 3-kinase, resulting in the production of phosphatidylinositol 3,4-bisphosphate and phosphatidylinositol 3,4,5-trisphosphate. The 3-phosphoinositides are not substrates of any known phospholipase C, are not components of the canonical phosphoinositide turnover pathway, and may themselves act as intracellular mediators. The 3-phosphoinositide pathway has been implicated in growth factor-dependent mitogenesis, membrane ruffling and glucose uptake. Furthermore the homology of the yeast vps34 with the mammalian phosphatidylinositol 3-kinase has suggested a role for this pathway in vesicular trafficking. In this review the different mechanisms employed by protein-tyrosine kinases to activate phosphatidylinositol 3-kinase, and its involvement in the signaling cascade initiated by tyrosine phosphorylation, are examined.