TOR (target of rapamycin) signaling coordinates cell growth, metabolism, and cell division through tight control of signaling via two complexes, TORC1 and TORC2. Here, we show that fission yeast TOR kinases and mTOR are phosphorylated on an evolutionarily conserved residue of their ATP-binding domain. The Gad8 kinase (AKT homologue) phosphorylates fission yeast Tor1 at this threonine (T1972) to reduce activity. A T1972A mutation that blocked phosphorylation increased Tor1 activity and stress resistance. Nitrogen starvation of fission yeast inhibited TOR signaling to arrest cell cycle progression in G1 phase and promoted sexual differentiation. Starvation and a Gad8/T1972-dependent decrease in Tor1 (TORC2) activity was essential for efficient cell cycle arrest and differentiation. Experiments in human cell lines recapitulated these yeast observations, as mTOR was phosphorylated on T2173 in an AKT-dependent manner. In addition, a T2173A mutation increased mTOR activity. Thus, TOR kinase activity can be reduced through AGC kinase-controlled phosphorylation to generate physiologically significant changes in TOR signaling.