Rapamycin is a powerful immunosuppressant that causes cell cycle arrest in T cells and several other cell types. Despite its important clinical role, the mechanism of action of rapamycin is not fully understood. Here, we show that rapamycin causes the activation of protein phosphatase-2A1 which forms a complex with proliferation cell nuclear antigen (PCNA) in a CD4+ T cell line. Rapamycin also induces PCNA translocation from the cytoplasm to the nucleus, an effect which is antagonized by okadaic acid, an inhibitor of type 2A protein phosphatases. These findings provide evidence for the existence of a signal transduction pathway that links a rapamycin-activated type 2A protein phosphatase to the control of DNA synthesis, DNA repair, cell cycle, and cell death via PCNA.