3-Phosphoinositide-dependent protein kinase-1 (PDK1) phosphorylates the T-loop of several AGC (cAMP-dependent, cGMP-dependent, protein kinase C) family protein kinases, resulting in their activation. Previous structural studies have revealed that the aC-helix, located in the small lobe of the kinase domain of PDK1, is a key regulatory element, as it links a substrate interacting site termed the hydrophobic motif (HM) pocket with the phosphorylated Ser-241 in the T-loop. In this study we have demonstrated by mutational analysis that interactions between the phosphorylated Ser-241 and the aC-helix are not required for PDK1 activity or substrate binding through the HM-pocket but are necessary for PDK1 to be activated or stabilized by a peptide that binds to this site. The structure of an inactive T-loop mutant of PDK1, in which Ser-241 is changed to Ala, was also determined. This structure, together with surface plasmon resonance binding studies, demonstrates that the PDK1(S241A)-inactive mutant possesses an intact HM-pocket as well as an ordered aC-helix. These findings reveal that the integrity of the aC-helix and HM-pocket in PDK1 is not regulated by T-loop phosphorylation.