The phosphotyrosine form of the major substrate for the insulin receptor tyrosine kinase, insulin receptor substrate 1 (IRS-1), associates with and activates the enzyme phosphatidylinositol 3'-kinase (PtdIns 3'-kinase). IRS-1 contains nine potential tyrosine phosphorylation sites within YMXM or YXXM sequences known to bind to the two SH2 domains on the 85-kDa regulatory subunit of PtdIns 3'-kinase. We used sequences within IRS-1 as a model for synthesizing phosphotyrosine and nonhydrolyzable phosphonotyrosine peptides containing two YMXM motifs and tested them for their ability to bind to the SH2 domains of PtdIns 3'-kinase and stimulate its activity. We demonstrated for the first time that IRS-1-derived peptides containing two tyrosine phosphorylated YMXM motifs are capable of stimulating PtdIns 3'-kinase activity in the cytosol of 3T3-L1 adipocytes at nanomolar concentrations, similar to that required by purified phosphoryl-IRS-1 [Lamphere, M., Carpenter, C. L., Sheng, Z., Kallen, R. G., & Lienhard, G. E. (1994) Am. J. Physiol. 266 (Endocrinol. Metab. 29), E486-E489] and the extent of activation by these peptides was similar to that seen by maximal stimulation of cells with insulin. In contrast, those phosphotyrosine peptides containing only a single YMXM motif were able to stimulate PtdIns 3'-kinase activity only at concentrations over 10 microM. We conclude from these results that the high-affinity activation of PtdIns 3'-kinase requires the simultaneous binding of two phosphorylated YMXM motifs on IRS-1 to the two SH2 domains of PtdIns 3'-kinase.