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.