The mammalian target of rapamycin (mTOR) complex 1 (mTORC1) functions as a rapamycin-sensitive environmental sensor that promotes cellular biosynthetic processes in response to growth factors and nutrients. While diverse physiological stimuli modulate mTORC1 signaling, the direct biochemical mechanisms underlying mTORC1 regulation remain poorly defined. Indeed, while three mTOR phosphorylation sites have been reported, a functional role for site-specific mTOR phosphorylation has not been demonstrated. Here we identify a new site of mTOR phosphorylation (S1261) by tandem mass spectrometry and demonstrate that insulin-phosphatidylinositol 3-kinase signaling promotes mTOR S1261 phosphorylation in both mTORC1 and mTORC2. Here we focus on mTORC1 and show that TSC/Rheb signaling promotes mTOR S1261 phosphorylation in an amino acid-dependent, rapamycin-insensitive, and autophosphorylation-independent manner. Our data reveal a functional role for mTOR S1261 phosphorylation in mTORC1 action, as S1261 phosphorylation promotes mTORC1-mediated substrate phosphorylation (e.g., p70 ribosomal protein S6 kinase 1 [S6K1] and eukaryotic initiation factor 4E binding protein 1) and cell growth to increased cell size. Moreover, Rheb-driven mTOR S2481 autophosphorylation and S6K1 phosphorylation require S1261 phosphorylation. These data provide the first evidence that site-specific mTOR phosphorylation regulates mTORC1 function and suggest a model whereby insulin-stimulated mTOR S1261 phosphorylation promotes mTORC1 autokinase activity, substrate phosphorylation, and cell growth.