In many human cancers, the cyclin-dependent kinase inhibitor p27(Kip1) is expressed at low or undetectable levels. The decreased p27(Kip1) expression allows cyclin-dependent kinase activity to cause cells to enter into S phase and correlates with poor patient survival. Inhibition of serine/threonine kinase Akt signaling by some pharmacological agents or by PTEN induces G(1) arrest, in part by up-regulating p27(Kip1). However, the role of Akt-dependent phosphorylation in p27(Kip1) regulation is not clear. Here, we show that Akt bound directly to and phosphorylated p27(Kip1). Screening p27(Kip1) phosphorylation sites identified the COOH-terminal Thr(198) residue as a novel site. Further analysis revealed that 14-3-3 proteins bound to p27(Kip1) through Thr(198) only when it was phosphorylated by Akt. Although Akt also phosphorylated p27(Kip1) at Ser(10) and Thr(187), these two sites were not involved in the binding to 14-3-3 proteins. p27(Kip1) phosphorylated at Thr(198) exists only in the cytoplasm. Therefore, Akt promotes cell-cycle progression through the mechanisms of phosphorylation-dependent 14-3-3 binding to p27(Kip1) and cytoplasmic localization.