We have studied mechanisms of Akt-mediated phosphorylation and regulation of cellular localization of p27. Akt phosphorylates Thr-157 in p27 and retains it in the cytosol. In cells arrested in G(1) and then synchronized to enter into S phase, Akt-mediated phosphorylation of Thr-157 p27 occurred in the cytosol during G(1) phase of the cell cycle. Both T157A and S10A p27 mutants localized in the nucleus in all phases of the cell cycle regardless of the expression of active Akt. Thr-157 phosphorylation was undetectable in S10A-p27, suggesting that Ser-10 phosphorylation is required for p27 localization in the cytosol and subsequent phosphorylation at Thr-157. Phosphorylation at Thr-157 interrupted the association of p27 with importin alpha. A T157A-p27 mutant protein exhibited higher association with importin alpha than wild-type-p27. Treatment of transfected and endogenous p27 with alkaline phosphatase rescued its association with importin alpha. Leptomycin B inhibited cytosolic Thr-157 P-p27 staining, implying that CRM1-dependent nuclear export is required for Akt-mediated Thr-157 phosphorylation. Heterokaryon shuttling assays with NIH3T3 (mouse) cells transfected with FLAG-p27 and HeLa (human) cells revealed that both wild type and T157A-p27 shuttled from NIH3T3 to HeLa cell nuclei with similar frequencies. However, S10A-p27 was found only in the NIH3T3 nuclei of NIH3T3-HeLa cell fusions. These results suggest that 1) Ser-10 phosphorylation is required for nuclear export of p27, 2) subsequent Akt-mediated phosphorylation at Thr-157 during G(1) phase corrals p27 in the cytosol, and 3) Thr-157 phosphorylation inhibits the association of p27 with importin alpha thus preventing its re-entry into the nucleus.