Kinases use ATP to phosphorylate substrates; recent findings underscore the additional regulatory roles of ATP. Here, we propose a mechanism for allosteric regulation of Akt1 kinase phosphorylation by ATP. Our 4.7-μs molecular dynamics simulations of Akt1 and its mutants in the ATP/ADP bound/unbound states revealed that ATP occupancy of the ATP-binding site stabilizes the closed conformation, allosterically protecting pT308 by restraining phosphatase access and key interconnected residues on the ATP→pT308 allosteric pathway. Following ATP→ADP hydrolysis, pT308 is exposed and readily dephosphorylated. Site-directed mutagenesis validated these predictions and indicated that the mutations do not impair PDK1 and PP2A phosphatase recruitment. We further probed the function of residues around pT308 at the atomic level, and predicted and experimentally confirmed that Akt1 H194R/R273H double mutant rescues pathology-related Akt1 R273H. Analysis of classical Akt homologs suggests that this mechanism can provide a general model of allosteric kinase regulation by ATP; as such, it offers a potential avenue for allosteric drug discovery.