Regulation of phosphatidylinositol 3-kinase (PI3K) activity has been demonstrated to be critical for correct lymphocyte function. The molecular targets of this lipid kinase have been the subject of extensive research, and many functional effects of PI3K activation are thought to be mediated by the serine-threonine kinase protein kinase B (PKB/c-akt). Genetic analyses in the nematode worm Caenorhabditis elegans have identified a novel PI3K-regulated signaling pathway that regulates organism lifespan through inhibition of a Forkhead (FOX) transcription factor, DAF-16. Recent studies have subsequently revealed an evolutionarily conserved signaling module in higher eukaryotes in which PKB can directly phosphorylate and inactive a family of Forkhead box class O (FOXO) transcription factors. Phosphorylation results in nuclear exclusion and inhibition of transcription. FOXO transcription factors have been found to play critical roles in regulation of proliferation, apoptosis and control of oxidative stress. This occurs through both activation and repression of target gene expression by multiple mechanisms. Here the regulation and function of these transcription factors is discussed with specific relevance to immune homeostasis. A greater understanding of the regulation and function of this signaling pathway in lymphocytes may provide novel therapeutic opportunities for immune diseases.