In Caenorhabditis elegans, an insulin-like signaling pathway to phosphatidylinositol 3-kinase (PI 3-kinase) and AKT negatively regulates the activity of DAF-16, a Forkhead transcription factor. We show that in mammalian cells, C. elegans DAF-16 is a direct target of AKT and that AKT phosphorylation generates 14-3-3 binding sites and regulates the nuclear/cytoplasmic distribution of DAF-16 as previously shown for its mammalian homologs FKHR and FKHRL1. In vitro, interaction of AKT- phosphorylated DAF-16 with 14-3-3 prevents DAF-16 binding to its target site in the insulin-like growth factor binding protein-1 gene, the insulin response element. In HepG2 cells, insulin signaling to PI 3-kinase/AKT inhibits the ability of a GAL4 DNA binding domain/DAF-16 fusion protein to activate transcription via the insulin-like growth factor binding protein-1-insulin response element, but not the GAL4 DNA binding site, which suggests that insulin inhibits the interaction of DAF-16 with its cognate DNA site. Elimination of the DAF-16/1433 association by mutation of the AKT/14-3-3 sites in DAF-16, prevents 14-3-3 inhibition of DAF-16 DNA binding and insulin inhibition of DAF-16 function. Similarly, inhibition of the DAF-16/14-3-3 association by exposure of cells to the PI 3-kinase inhibitor LY294002, enhances DAF-16 DNA binding and transcription activity. Surprisingly constitutively nuclear DAF-16 mutants that lack AKT/14-3-3 binding sites also show enhanced DNA binding and transcription activity in response to LY294002, pointing to a 14-3-3-independent mode of regulation. Thus, our results demonstrate at least two mechanisms, one 14-3-3-dependent and the other 14-3-3-independent, whereby PI 3-kinase signaling regulates DAF-16 DNA binding and transcription function.