The binding of small phosphopeptides to the SH2 domains of the p85 regulatory subunit of PI 3-kinase can activate the enzyme in vitro. In the present study a cell-permeable peptide that binds specifically 60 the SH2 domains of p85 has been evaluated for its ability to stimulate a mitogenic response in the C2 muscle cell line. This peptide, in contrast to four other SH2-binding peptides, was as effective as serum, EGF, and FGF at stimulating entry into S-phase. The response 60 the p85 binding peptide, but not FGF, was inhibited by wortmannin and rapamycin, indicating that the peptide activates the PI 3-kinase/S6 kinase signalling pathway. The peptide response was not inhibited by the MEK inhibitor (PD098059) and did not stimulate Erk phosphorylation. Thus, there would appear to be no direct cross-talk between the pathway activated by the p85 binding peptide and the p42/p44 MAPK cascade. (C) 1998 Academic Press.