STAT1 must be phosphorylated on serine 727 to be fully active in transcription. We show that phosphatidylinositol-3’-kinase (PI3K) and its effector kinase Akt play an important role in the serine phosphorylation of STAT1 and in the activation of gene expression in response to IFN. IFN activates PI3K as well as Akt in a variety of cell lines. Specific inhibition of PI3K abrogates IFN-induced, but not IL-1- or TNF-induced, phosphorylation of STAT1 on serine and reduces STAT1-dependent transcription and gene expression by approximately 7-fold. Constitutively active forms of PI3K or Akt activate and their dominant-negative derivatives inhibit STAT1-driven transactivation in response to IFN. In addition to PI3K and Akt, JAK1, JAK2 and the tyrosine 440 STAT1 docking residue of IFNGR1 are required for STAT1 to be phosphorylated on serine. Taken together, these results suggest that the following events lead to the activation of STAT1 upon IFN stimulation: 1) PI3K and Akt are activated by the occupied receptor and Y440 is phosphorylated by the activated JAKs; 2) STAT1 docks to Y440; 3) Y701 is phosphorylated by the JAKs and S727 is phosphorylated by a kinase downstream of Akt.