Numerous hormones, cytokines and transforming oncogenes activate phosphoinositide 3-kinase (PI-3K), a lipid kinase that initiates signal transduction cascades regulating cellular proliferation, survival, protein synthesis and glucose metabolism. PI-3K catalyses the production of the 3'-phosphoinositides PtdIns(3,4)P(2) and PtdIns(3,4,5)P(3), which recruit downstream effector enzymes to the membrane via their pleckstrin homology (PH) domains. Recent studies have indicated that another signalling lipid, the sphingolipid ceramide, inhibits several PI-3K-dependent events, including insulin-stimulated glucose uptake and growth-factor-stimulated cell survival. Here we show that ceramide analogues specifically prevent the recruitment of the PtdIns(3,4,5)P(3)-binding proteins Akt/protein kinase B (PKB) or the general receptor for phosphoinositides-1 (GRP1). Specifically, the short-chain ceramide derivative C2-ceramide inhibited the platelet-derived growth factor (PDGF)-stimulated translocation of full-length Akt/PKB, as well as truncated proteins encoding only the PH domains of Akt/PKB or GRP1. C2-ceramide did not alter the membrane localization of the PH domain for phospholipase Cdelta, which preferentially binds PtdIns(4,5)P(2), nor did it affect the PDGF-stimulated production of PtdIns(3,4)P(2) or PtdIns(3,4,5)P(3). Interestingly, a glucosylceramide synthase inhibitor, 1-phenyl-2-decanoylamino-3-morpholinopropan-1-ol (PDMP), shown previously to increase intracellular ceramide concentrations without affecting PI-3K [Rani, Abe, Chang, Rosenzweig, Saltiel, Radin and Shayman (1995) J. Biol. Chem. 270, 2859-2867], recapitulated the inhibitory effects of C2-ceramide on PDGF-stimulated Akt/PKB phosphorylation. These studies indicate that ceramide prevents the translocation of certain PtdIns(3,4,5)P(3)-binding proteins, despite the presence of a full complement of PtdIns(3,4)P(2) or PtdIns(3,4,5)P(3). Furthermore, these findings suggest a mechanism by which stimuli that induce ceramide synthesis could negate the fundamental signalling pathways initiated by PI-3K.