The complex of rapamycin with its intracellular receptor, FKBP12, interacts with RAFT1/FRAP/mTOR, the in vivo rapamycin-sensitive target and a member of the ataxia telangiectasia mutated (ATM)-related family of kinases that share homology with the catalytic domain of phosphatidylinositol 3-kinase. The function of RAFT1 in the rapamycin-sensitive pathway and its connection to downstream components of the pathway, such as p70 S6 kinase and 4E-BP1, are poorly understood. Here, we show that RAFT1 directly phosphorylates p70^S6k, 4E-BP1, and 4E-BP2 and that serum stimulates RAFT1 kinase activity with kinetics similar to those of p70^S6k and 4E-BP1 phosphorylation. RAFT1 phosphorylates p70^S6k on Thr-389, a residue whose phosphorylation is rapamycin-sensitive in vivo and necessary for S6 kinase activity. RAFT1 phosphorylation of 4E-BP1 on Thr-36 and Thr-45 blocks its association with the cap-binding protein, eIF-4E, in vitro, and phosphorylation of Thr-45 seems to be the major regulator of the 4E-BP1–eIF-4E interaction in vivo. RAFT1 phosphorylates p70^S6k much more effectively than 4E-BP1, and the phosphorylation sites on the two proteins show little homology. This raises the possibility that, in vivo, an unidentified kinase analogous to p70^S6k is activated by RAFT1 phosphorylation and acts at the rapamycin-sensitive phosphorylation sites of 4E-BP1.