The protein kinase AKT1 (v-akt murine thymoma viral oncogene homolog 1), also referred to as protein kinase B (PKB), is an essential mediator of the phosphatidylinositol 3-kinase signaling pathway. Elevated activity of AKT1 is common in human cancer. Localization at the plasma membrane, leading to enhanced phosphorylation and activation of AKT1, is an important factor determining the oncogenicity of this kinase. Although the phosphatidylinositol 3-kinase signaling pathway is frequently upregulated in cancer, cancer-specific mutations in AKT1 are not common. Recently, such a mutation has been identified in breast, colon and ovarian cancers. The mutation is located in the pleckstrin homology (PH) domain of AKT1 and results in a glutamic acid to lysine substitution at residue 17. The resultant change in the conformation of the PH domain facilitates membrane binding of the mutant protein. Here we show that exchange of the PH domain leading to preferential binding of phosphatidylinositol 4,5-bisphosphate (PIP(2)) over phosphatidylinositol 3,4,5-trisphosphate (PIP(3)) constitutively activates AKT1. AKT1 with this altered PIP affinity induces oncogenic transformation in cultures of chicken embryo fibroblasts and causes neoplastic growth and angiogenesis in the chorioallantoic membrane of the chicken embryo. Gain-of-function mutants of AKT1 may not be affected by PI3K inhibitors that are currently in development. Therefore, AKT1 remains a distinct and important cancer target.