Updated project metadata. Serum- and glucocorticoid-regulated kinase 3 (Sgk3) is activated by the phospholipid 19 phosphatidylinositol-3-phosphate (PI3P) downstream of growth factor signaling and 20 by Vps34-mediated PI3P production during autophagy. Upregulation of Sgk3 activity 21 has been linked to a number of human cancers due to its overlapping substrate 22 specificity with Akt. Here, we show that Sgk3 is regulated by a combination of 23 phosphorylation and allosteric activation by PI3P. We demonstrate that Sgk3 is 24 specifically activated by PI3P and that PI3P binding induces large conformational 25 changes in Sgk3. Using Vps34 and liposomes containing phosphatidylinositol, we 26 reconstitute Sgk3 signaling via Vps34-mediated PI3P synthesis in vitro. In addition to 27 defining the mechanism of Sgk3 activation by PI3P, our findings open up potential 28 therapeutic avenues in allosteric inhibitor development to target Sgk3 in cancer.