Growth factors such as insulin regulate phosphatidylinositol 3-kinase-dependent actin cytoskeleton rearrangement in many types of cells. However, the mechanism by which the insulin signal is transmitted to the actin cytoskeleton remains largely unknown. Yeast two-hybrid screening revealed that the phosphatidylinositol 3-kinase downstream effector phosphoinositide-dependent protein kinase-1 (PDK1) interacted with protein kinase N (PKN), a Rho-binding Ser/Thr protein kinase potentially implicated in a variety of cellular events, including phosphorylation of cytoskeletal components. PDK1 and PKN interacted in vitro and in intact cells, and this interaction was mediated by the kinase domain of PDK1 and the carboxyl terminus of PKN. In addition to a direct interaction, PDK1 also phosphorylated Thr(774) in the activation loop and activated PKN. Insulin treatment or ectopic expression of the wild-type PDK1 or PKN, but not protein kinase Czeta, induced actin cytoskeleton reorganization and membrane ruffling in 3T3-L1 fibroblasts and Rat1 cells that stably express the insulin receptor (Rat1-IR). However, the insulin-stimulated actin cytoskeleton reorganization in Rat1-IR cells was prevented by expression of kinase-defective PDK1 or PDK1-phosphorylation site-mutated PKN. Thus, phosphorylation by PDK1 appears to be necessary for PKN to transduce signals from the insulin receptor to the actin cytoskeleton.