Intrahepatic expression of hepatitis B x antigen (HBxAg) is associated with the development of hepatocellular carcinoma (HCC), perhaps through trans-activation of selected cellular genes. When this was examined by PowerBlot analysis, upregulated levels of -catenin and several known -catenin effectors were observed in HBxAg-positive compared with HBxAg-negative HepG2 cells. When HBxAg was introduced into Hep3B cells, upregulated expression of wildtype -catenin was observed. This was also observed in Hep3B cells overexpressing the HBxAg upregulated gene, URG11. Upregulated expression of URG11 and -catenin correlated with HBxAg trans-activation function. Transient transfection assays with fragments of the -catenin promoter showed that it was activated by both HBxAg and URG11 and inhibited by URG11-specific small inhibitory RNA. The latter also inhibited the growth of Hep3BX cells in a serumfree medium, which correlated with depressed levels of -catenin. Activation of -catenin effector genes was observed in cells stably expressing HBxAg or overexpressing URG11 compared with control cells transfected with the pTOPFLASH reporter plasmid. Extensive costaining between HBxAg, URG11, and -catenin was observed in infected liver and HCC nodules, suggesting a close relationship in vivo. In conclusion, wild-type -catenin is activated by HBxAg, in part, through the upregulated expression of the HBxAg effector URG11. URG11 stimulates the -catenin promoter and hepatocellular growth and survival. These observations also suggest that URG11 may be a regulatory element in the -catenin signaling pathway and may be a target for chemoprevention of HCC. (HEPATOLOGY 2006;43:415-424.)