Activation of the serine/threonine kinase AM and the regulation of its activation are recognized as critical in controlling proliferative/survival signals via many hematopoietic receptors. In B lymphocytes, the B-cell receptor (BCR)-mediated activation of AM is attenuated by co-crosslinking of BCR with the inhibitory receptor Fc gamma RIIB1, and the binding of the SH2 domain-containing inositol phosphatase, SHIP, to Fc gamma RIIB1. Because SHIP dephosphorylates phosphatidylinositol 3,4,5-trisphosphate (PIP3) and activation of AM requires PIP3, the destruction of this phospholipid has been proposed as the mechanism for Akt inhibition. However, upstream kinases that activate AM, such as PDK1, also require PIP3 for activation. In this report, we addressed whether SHIP inhibits Akt directly at the level of Akt recruitment to the membrane, indirectly through PDK recruitment/phosphorylation of AM, or both. We generated stable B-cell lines expressing a regulatable, but constitutively membrane-bound Akt that still required PDK-dependent phosphorylation for activation. Several lines of evidence suggested that activation of this membrane-targeted AM is not inhibited by Fc gamma RIIB1/SHIP and that PDK is not a target for SHIP-mediated inhibition. These data demonstrate that SHIP inhibits Akt primarily through regulation of AM membrane localization. We also observed during these studies that Fc gamma RIIB1/SHIP does not inhibit p70(S6k) activation, even though several other PIPS-dependent events were down-regulated. Because the enhanced activation of AM in the absence of SHIP correlates with hyperproliferation in the myeloid lineage, our data have implications for SHIP and AM-dependent regulation of proliferation in the hematopoietic lineage. (Blood. 2000;96:1449-1456) (C) 2000 by The American Society of Hematology.