The transcription factor, forkhead in rhabdomyosarcoma (FKHR), is phosphorylated at three amino acid residues (Thr-24, Ser-256 and Ser-319) by protein kinase B (PKB)α. In the present study, mutagenesis has been used to study the roles of these phosphorylation events in regulating FKHR function in transfected HEK-293 cells. We find that the overexpression of FKHR[S256A] (where Ser-256 → Ala) blocks PKB activity in cells, preventing phosphorylation of the endogenous substrates FKHRL1 and glycogen synthase kinase-3. Thus some reported effects of overexpression of this and other mutants may be indirect, and result from suppression of the phosphorylation of other sites on FKHR and/or other PKB substrates. For example, we have shown that Thr-24 phosphorylation alone is critical for interaction with 14-3-3 proteins, and that the substitution of Ser-256 with an alanine residue indirectly blocks 14-3-3 protein binding by preventing the phosphorylation of Thr-24. We also found that insulin-like growth factor (IGF)-1 and serum-induced nuclear exclusion of FKHR[S256A] depends on the degree of overexpression of this mutant. Our results indicated that the interaction of FKHR with 14-3-3 proteins was not required for IGF-1-stimulated exclusion of FKHR from the nucleus. We present evidence in support of another mechanism, which depends on the phosphorylation of Ser-256 and may involve the masking of a nuclear localization signal. Finally, we have demonstrated that the failure of IGF-1 to suppress transactivation by FKHR[S256A] is not explained entirely by its failure to bind 14-3-3 proteins or to undergo nuclear exclusion. This result suggests that Ser-256 phosphorylation may also suppress transactivation by FKHR by yet another mechanism, perhaps by disrupting the interaction of FKHR with target DNA binding sites and/or the function of the transactivation domain.