The Target of rapamycin (TOR) protein kinase forms part of TOR complex 1 (TORC1) and TOR complex 2 (TORC2), two multi-subunit protein complexes that regulate growth, proliferation, survival and developmental processes by phosphorylation and activation of AGC-family kinases. In the fission yeast, Schizosaccharomyces pombe, TORC2 and its target, the AGC kinase Gad8 (an orthologue of human AKT or SGK1) are required for viability under stress conditions and for developmental processes in response to starvation cues. In this study, we describe the isolation of gad8 mutant alleles that bypass the requirement for TORC2 and reveal a separation of function of TORC2 and Gad8 under stress conditions. In particular, osmotic and nutritional stress responses appear to form a separate branch from genotoxic stress responses downstream of TORC2-Gad8. Interestingly, TORC2-independent mutations map into the regulatory PIF pocket of Gad8, a highly conserved motif in AGC kinases that regulates substrate binding in PDK1 (phosphoinositide dependent kinase-1) and kinase activity in several AGC kinases. Gad8 activation is thought to require a two-step mechanism, in which phosphorylation by TORC2 allows further phosphorylation and activation by Ksg1 (an orthologue of PDK1). We focus on the Gad8-K263C mutation and demonstrate that it renders the Gad8 kinase activity independent of TORC2 in vitro and independent of the phosphorylation sites of TORC2 in vivo. Molecular dynamics simulations of Gad8-K263C revealed abnormal high flexibility at T387, the phosphorylation site for Ksg1, suggesting a mechanism for the TORC2-independent Gad8 activity. Significantly, the K263 residue is highly conserved in the family of AGC-kinases, which may suggest a general way of keeping their activity in check when acting downstream of TOR complexes. Author summary Protein kinases catalyze the transfer of phosphate from high-energy, phosphate-donating molecules, such as ATP, to their substrates. This process is pivotal for regulation of almost any aspect of cellular biology. Many human diseases are associated with aberrant functions of protein kinases due to mutations. Accordingly, there is a growing number of kinase inhibitors that have been approved for clinical use. A better understanding of how protein kinases become active and how their activity is relayed to regulate their cellular functions is much needed for rational design of kinase inhibitors and for their optimal use in the clinic. The AGC-family of protein kinases play key roles in regulating cellular growth, proliferation and survival. In human cells, as well as in the fission yeast, our cellular model system, a subgroup of the AGC kinases is activated by the TOR protein kinases. Here we report the isolation of mutations in the AGC kinase Gad8 (AKT or SGK1 in human) that bypass the requirement for activation by TOR. Analyses of how these mutations affect cellular growth revealed separate branches of stress response mechanisms downstream of Gad8, while computer simulation methods suggested a molecular mechanism that keeps the activity of Gad8 in check.