In obese adipose tissue, Toll-like receptor signaling in macrophages leads to insulin resistance in adipocytes. Similarly, Toll signaling in the Drosophila larval fat body blocks insulin-dependent growth and nutrient storage. We find that Toll acts cell autonomously to block growth but not PI(3,4,5)P3 production in fat body cells expressing constitutively active PI3K. Fat body Toll signaling blocks whole-animal growth in rictor mutants lacking TORC2 activity, but not in larvae lacking Pdk1. Phosphorylation of Akt on the Pdk1 site, Thr342, is significantly reduced by Toll signaling, and expression of mutant AktT342D rescues cell and animal growth, nutrient storage, and viability in animals with active Toll signaling. Altogether, these data show that innate immune signaling blocks insulin signaling at a more distal level than previously appreciated, and they suggest that manipulations affecting the Pdk1 arm of the pathway may have profound effects on insulin sensitivity in inflamed tissues.