Serum- and glucocorticoid-inducible kinases (SGKs) form a novel family of serine/threonine kinases that are activated in response to a variety of extracellular stimuli. SGKs are related to Akt (also called PKB), a serine/threonine kinase that plays a crucial role in promoting cell survival. Like Akt, SGKs are activated by the phosphoinositide-3 kinase (PI3K) and translocate to the nucleus upon growth factor stimulation. However the physiological substrates and cellular functions of SGKs remained to be identified. We hypothesized that SGKs regulate cellular functions in concert with Akt by phosphorylating common targets within the nucleus. The best-characterized nuclear substrates of Akt are transcription factors of the Forkhead family. Akt phosphorylates Forkhead transcription factors such as FKHRL1, leading to FKHRL1's exit from the nucleus and the consequent shutoff of FKHRL1 target genes. We show here that SGK1, like Akt, promotes cell survival and that it does so in part by phosphorylating and inactivating FKHRL1. However, SGK and Akt display differences with respect to the efficacy with which they phosphorylate the three regulatory sites on FKHRL1. While both kinases can phosphorylate Thr-32, SGK displays a marked preference for Ser-315 whereas Akt favors Ser-253. These findings suggest that SGK and Akt may coordinately regulate the function of FKHRL1 by phosphorylating this transcription factor at distinct sites. The efficient phosphorylation of these three sites on FKHRL1 by SGK and Akt appears to be critical to the ability of growth factors to suppress FKHRL1-dependent transcription, thereby preventing FKHRL1 from inducing cell cycle arrest and apoptosis. These findings indicate that SGK acts in concert with Akt to propagate the effects of PI3K activation within the nucleus and to mediate the biological outputs of PI3K signaling, including cell survival and cell cycle progression.