Expression of the JCV early protein T-antigen in transgenic mice leads to the development of cerebellar primitive neuroectodermal tumors (PNETs). In light of earlier reports on the association of JCV with PNETs in humans and the involvement of the Wnt signaling pathway in the development of cerebellar tumors, we investigated the interplay between T-antigen and beta-catenin, the key protein of the Wnt pathway. Our results demonstrate the physical interaction of T-antigen with beta-catenin through the central domain of T-antigen spanning residues 82-628, and the C-terminus of beta-catenin located between amino acids 695 and 781. The association of T-antigen with beta-catenin elevates the level of beta-catenin in the cells due to increased in the stability of the protein. In the presence of T-antigen, beta-catenin was found in the nuclei of cells, suggesting that the interaction of beta-catenin with T-antigen facilitates its nuclear import. In cells expressing mutant T-antigen with no nuclear localization domain, beta-catenin was found in the cytoplasm. Coexpression of T-antigen with beta-catenin increased the transcription of the c-myc promoter, a known downstream target of beta-catenin, and artificial promoter whose activity is beta-catenin dependent. These observations ascribe a new oncogenic pathway for T-antigen, and offer an alternative mechanism for the deregulation of the Wnt pathway through stabilization of beta-catenin upon its association with the viral oncoprotein.