The Kaposi's sarcoma–associated herpesvirus (KSHV) latency-associated nuclear antigen (LANA) is expressed in all KSHV-associated tumors, including Kaposi's sarcoma (KS) and primary effusion lymphoma (PEL). We found that β-catenin is overexpressed in both PEL cells and KS tissue. Introduction of anti-LANA small interfering RNA (siRNA) into PEL cells eliminated β-catenin accumulation; LANA itself upregulated expression of β-catenin in transfected cells. LANA stabilizes β-catenin by binding to the negative regulator GSK-3β, causing a cell cycle–dependent nuclear accumulation of GSK-3β. The LANA C terminus contains sequences similar to the GSK-3β-binding domain of Axin. Disruption of this region resulted in a mutant LANA that failed to re-localize GSK-3β or stabilize β-catenin. The importance of this pathway to KSHV-driven cell proliferation was highlighted by the observation that LANA, but not mutant LANA, stimulates entry into S phase. Redistribution of GSK-3β can therefore be a source of β-catenin dysregulation in human cancers.