The BCR/ABL oncogenic tyrosine kinase activates phosphatidylinositol 3‐kinase (PI‐3k) by a mechanism that requires binding of BCR/ABL to p85, the regulatory subunit of PI‐3k, and an intact BCR/ABL SH2 domain. SH2 domain BCR/ABL mutants deficient in PI‐3k activation failed to stimulate Akt kinase, a recently identified PI‐3k downstream effector with oncogenic potential, but did activate p21 RAS and p70 S6 kinase. The PI‐3k/Akt pathway is essential for BCR/ABL leukemogenesis as indicated by experiments demonstrating that wortmannin, a PI‐3k specific inhibitor at low concentrations, suppressed BCR/ABL‐dependent colony formation of murine marrow cells, and that a kinase‐deficient Akt mutant with dominant‐negative activity inhibited BCR/ABL‐dependent transformation of murine bone marrow cells in vitro and suppressed leukemia development in SCID mice. In complementation assays using mouse marrow progenitor cells, the ability of transformation‐defective SH2 domain BCR/ABL mutants to induce growth factor‐independent colony formation and leukemia in SCID mice was markedly enhanced by expression of constitutively active Akt. In retrovirally infected mouse marrow cells, the BCR/ABL mutant lacking the SH2 domain was unable to upregulate the expression of c‐Myc and Bcl‐2; in contrast, expression of a constitutively active Akt mutant induced Bcl‐2 and c‐Myc expression, and stimulated the transcription activation function of c‐Myc. Together, these data demonstrate the requirement for the BCR/ABL SH2 domain in PI‐3k activation and document the essential role of the PI‐3k/Akt pathway in BCR/ABL leukemogenesis.