Cell cycle progression initiated by interleukin-2 (IL-2) in T cells is critical for lymphoproliferation and an immune response. Phosphatidyl inositol 3-kinase (PI3K) is activated by IL-2. However, nuclear targets for PI3K are not known. Here we identify the cell cycle regulator E2F as an IL-2 target in T lymphocytes and PI3K as the critical signaling pathway. We eliminate both Stat5 and Raf/MEK pathways from E2F regulation. Protein kinase B (PKB) is activated by IL-2 via PI3K. The expression of an active PKB is sufficient to induce E2F activity. Inhibition of PI3K inhibits phosphorylation of Rb, induction of cyclin D3, and degradation of p27 ^kip1. These results establish a crucial PI3K/PKB–mediated link between the IL-2 receptor and the cell cycle machinery.