Xenopus oocytes from unprimed frogs possess insulin-like growth factor I (IGF-I) receptors but lack insulin and IGF-I receptor substrate 1 (IRS-1), the endogenous substrate of this kinase, and fail to show downstream responses to hormonal stimulation. Microinjection of recombinant IRS-1 protein enhances insulin-stimulated phosphatidylinositol (PtdIns) 3-kinase activity and restores the germinal vesicle breakdown response. Activation of PtdIns 3-kinase results from formation of a complex between phosphorylated IRS-1 and the p85 subunit of PtdIns 3-kinase. Microinjection of a phosphonopeptide containing a pYMXM motif with high affinity for the src homology 2 (SH2) domain of PtdIns 3-kinase p85 inhibits IRS-1 association with and activation of the PtdIns 3-kinase. Formation of the IRS-1-PtdIns 3-kinase complex and insulin-stimulated PtdIns 3-kinase activation are also inhibited by microinjection of a glutathione S-transferase fusion protein containing the SH2 domain of p85. This effect occurs in a concentration-dependent fashion and results in a parallel loss of hormone-stimulated oocyte maturation. These inhibitory effects are specific and are not mimicked by glutathione S-transferase fusion proteins expressing the SH2 domains of ras-GAP or phospholipase C gamma. Moreover, injection of the SH2 domains of p85, ras-GAP, and phospholipase C gamma do not interfere with progesterone-induced oocyte maturation. These data demonstrate that phosphorylation of IRS-1 plays an essential role in IGF-I and insulin signaling in oocyte maturation and that this effect occurs through interactions of the phosphorylated YMXM/YXXM motifs of IRS-1 with SH2 domains of PtdIns 3-kinase or some related molecules.