Protein kinase B (PKB), a serine threonine kinase is critically involved in cellular proliferation and survival. To characterize its role in T cell development in vivo, we have analyzed transgenic mice that express a membrane-targeted constitutively active version of PKB (myr PKB) in thymocytes and peripheral T cells. We report that myr PKB renders proliferative responses of thymocytes more sensitive to TCR signals by increased and sustained activation of Src kinase Lck and the extracellular signal-regulated kinase/mitogen-activated protein kinase pathway. In addition, the proliferative response of myr PKB T cells is relatively independent of calcium mobilization and calcineurin activity. We also find that myr PKB enhances phosphorylation of glycogen synthase kinase 3, a negative regulator of NFAT and T cell activation, and the recruitment of the adapter protein Cbl-c. Interestingly, we demonstrate that upon TCR/CD3 stimulation of wild-type T cells PKB is translocated into lipid rafts, adding a new role for PKB in TCR-initiated signalosome formation in T cell activation. Localization of transgenic PKB in lipid rafts could contribute to the higher TCR sensitivity of myr PKB thymocytes which is reflected in an increase in positive selection toward the CD4 lineage and variable effects on negative selection depending on the model system analyzed. Thus, our observations clearly indicate a cross-talk between PKB and important signaling molecules downstream of TCR that modulate the thresholds of thymocyte selection and T cell activation.