Saccharomyces cerevisiae Pkh1 and Pkh2 (orthologues of mammalian protein kinase, PDK1) are functionally redundant. These kinases activate three AGC family kinases involved in the maintenance of cell wall integrity: Ypk1 and Ypk2, two closely related, functionally redundant enzymes (orthologues of mammalian protein kinase SGK), and Pkc1 (orthologue of mammalian protein kinase PRK2). Pkh1 and Pkh2 activate Ypk1, Ypk2 and Pkc1 by phosphorylating a Thr in a conserved sequence motif (PDK1 site) within the activation loop of these proteins. A fourth protein kinase involved in growth control and stress response, Sch9 (orthologue of mammalian protein kinase c-Akt/PKB), also carries the conserved activation loop motif. Like other AGC family kinases, Ypk1, Ypk2, Pkc1 and Sch9 also carry a second conserved sequence motif situated in a region C-terminal to the catalytic domain, called the hydrophobic motif (PDK2 site). Currently, there is still controversy surrounding the identity of the enzyme responsible for phosphorylating this second site and the necessity for phosphorylation at this site for in vivo function. Here, genetic and biochemical methods have been used to investigate the physiological consequences of phosphorylation at the PDK1 and PDK2 sites of Ypk1, Pkc1 and Sch9. It was found that phosphorylation at the PDK1 site in the activation loop is indispensable for the essential functions of all three kinases in vivo, whereas phosphorylation at the PDK2 motif plays a non-essential and much more subtle role in modulating the ability of these kinases to regulate the downstream processes in which they participate.