In a short hairpin RNA screen for genes that affect AKT phosphorylation, we identified the RAB35 small guanosine triphosphatase (GTPase)—a protein previously implicated in endomembrane trafficking—as a regulator of the phosphatidylinositol 3′-OH kinase (PI3K) pathway. Depletion of RAB35 suppresses AKT phosphorylation in response to growth factors, whereas expression of a dominant active GTPase-deficient mutant of RAB35 constitutively activates the PI3K/AKT pathway. RAB35 functions downstream of growth factor receptors and upstream of PDK1 and mTORC2 and copurifies with PI3K in immunoprecipitation assays. Two somatic RAB35 mutations found in human tumors generate alleles that constitutively activate PI3K/AKT signaling, suppress apoptosis, and transform cells in a PI3K-dependent manner. Furthermore, oncogenic RAB35 is sufficient to drive platelet-derived growth factor receptor α to LAMP2-positive endomembranes in the absence of ligand, suggesting that there may be latent oncogenic potential in dysregulated endomembrane trafficking.