Exposure of human alveolar macrophages to bacterial LPS results in activation of a number of signal transduction pathways. An early event after the alveolar macrophage comes in contact with LPS is activation of the phosphatidylinositol 3 kinase (PI 3-kinase). This study evaluates the downstream effects of that activation. We observed that LPS exposure results in phosphorylation of Akt (serine 473). We found this using both phosphorylation-specific Abs and also by in vivo phosphorylation with 32P-loaded cells. AKT activation resulted in the phosphorylation-dependent inactivation of glycogen synthase kinase (GSK-3) (serine 21/9). We found that both of these events were linked to PI 3-kinase because the PI 3-kinase inhibitors, wortmannin and LY294002, inhibited LPS-induced phosphorylation of both AKT and GSK-3. Inactivation of GSK-3 has been shown to reduce the ubiquitination of β-catenin, resulting in nuclear accumulation and transcriptional activity of β-catenin. Consistent with this, we found that LPS caused an increase in the amounts of PI 3-kinase-dependent nuclear β-catenin in human alveolar macrophages and expression of genes that require nuclear β-catenin for their activation. This is the first demonstration that LPS exposure activates AKT, inactivates GSK-3, and causes accumulation and transcriptional activity of β-catenin in the nucleus of any cell, including alveolar macrophages.