Class I phosphoinositide 3-kinases (PI3Ks) are implicated in many cellular responses controlled by receptor tyrosine kinases (RTKs), including actin cytoskeletal remodeling. Within this pathway, Rac is a key downstream target/effector of PI3K. However, how the signal is routed from PI3K to Rac is unclear. One possible candidate for this function is the Rac-activating complex Eps8-Abi1-Sos-1, which possesses Rac-specific guanine nucleotide exchange factor (GEF) activity. Here, we show that Abi1 (also known as E3b1) recruits PI3K, via p85, into a multimolecular signaling complex that includes Eps8 and Sos-1. The recruitment of p85 to the Eps8-Abi1-Sos-1 complex and phosphatidylinositol 3, 4, 5 phosphate (PIP3), the catalytic product of PI3K, concur to unmask its Rac-GEF activity in vitro. Moreover, they are indispensable for the activation of Rac and Rac-dependent actin remodeling in vivo. On growth factor stimulation, endogenous p85 and Abi1 consistently colocalize into membrane ruffles, and cells lacking p85 fail to support Abi1-dependent Rac activation. Our results define a mechanism whereby propagation of signals, originating from RTKs or Ras and leading to actin reorganization, is controlled by direct physical interaction between PI3K and a Rac-specific GEF complex.