The phosphatidylinositol 3-kinase (PI3K)-protein kinase B (PKB)/Akt-PTEN signal transduction pathway orchestrates a variety of fundamental cell processes and its deregulation is implicated in many human diseases. Although the importance of this pathway to many cellular functions is well established, the mechanisms by which it achieves context-specific physiological outcomes in response to a variety of stimuli, using a relatively limited pool of effectors, remain largely unknown. Spatial restriction of signaling events is one means by which cells coordinate specific responses using common molecules. To investigate the subcellular location-specific roles of the major PI3K effector PKB/Akt in various cell processes, we have developed a novel experimental system employing cellular compartment-directed PKB/Akt pseudosubstrate inhibitors. Subcellular location-restricted PKB/Akt inhibition in the 3T3L1 adipocyte differentiation model revealed that nuclear and plasma membrane, but not cytoplasmic, PKB/Akt activity is required for terminal adipocyte differentiation. Nuclear and plasma membrane pools of PKB/Akt were found to contribute to distinct stages of adipocyte differentiation, revealing that PKB/Akt activity impacts multiple points of this program. Our work establishes the use of localized pseudosubstrate PKB/Akt inhibitors as an effective method for the dissection of PKB/Akt signaling.The phosphatidylinositol 3-kinase (PI3K) 2 -protein kinase B (PKB)/Akt-phosphatase and tensin homolog (PTEN) pathway is an evolutionarily conserved signaling cascade implicated in the regulation of several fundamental cell processes including cell proliferation, survival, motility and size, glucose metabolism, and differentiation. Appropriate execution of PI3K-PKB/ Akt-PTEN signaling is of critical importance to the proper functioning of cells and organisms, exemplified by the variety of developmental defects associated with disruption of its constituents in model organisms (1). Moreover, the components of the pathway are frequent targets of mutations associated with cancer and other human diseases (2).Upon activation in response to a variety of cellular stimuli, PI3K phosphorylates the D3 position of the phosphoinositide PI(4,5)P 2 , leading to the generation of the second messenger PI(3,4,5)P 3 at the plasma membrane. PI(3,4,5)P 3 acts as a docking site for pleckstrin homology (PH) domain containing proteins such as PKB/Akt and its activating kinase, 3-phosphoinositide-dependent kinase 1 (3). Upon recruitment to PI(3,4,5)P 3 and activation-specific phosphorylation by 3-phosphoinositide-dependent kinase 1, as well as additional phosphorylation by mammalian target of rapamycin complex 2 (mTORC2) (4), fully activated PKB/Akt executes a wide spectrum of cellular responses acting through a variety of intracellular substrates (5). The role of this signaling pathway in the process of adipocyte differentiation has been demonstrated by genetic disruption of PKB/Akt in mice, which results in impaired adipogenesis (6), as well as cell culture...