Phosphatidylinositol 3-kinase (PI3K) promotes cell survival and communication by activating its downstream effector Akt kinase. Here we show that PS1, a protein involved in familial Alzheimer's disease (FAD), promotes cell survival by activating the PI3K/Akt cell survival signaling. This function of PS1 is unaffected by gamma-secretase inhibitors. Pharmacological and genetic evidence indicates that PS1 acts upstream of Akt, at or before PI3K kinase. PS1 forms complexes with the p85 subunit of PI3K and promotes cadherin/PI3K association. Furthermore, conditions that inhibit this association prevent the PS1-induced PI3K/Akt activation, indicating that PS1 stimulates PI3K/Akt signaling by promoting cadherin/PI3K association. By activating PI3K/Akt signaling, PS1 promotes phosphorylation/inactivation of glycogen synthase kinase-3 (GSK-3), suppresses GSK-3-dependent phosphorylation of tau at residues overphosphorylated in AD and prevents apoptosis of confluent cells. PS1 FAD mutations inhibit the PS1-dependent PI3K/Akt activation, thus promoting GSK-3 activity and tau overphosphorylation at AD-related residues. Our data raise the possibility that PS1 may prevent development of AD pathology by activating the PI3K/Akt signaling pathway. In contrast, FAD mutations may promote AD pathology by inhibiting this pathway.