While PDZ domain-containing proteins represent cellular targets for several different viral oncoproteins, including human papillomavirus E6, human T-cell leukemia virus type 1 Tax, and human adenovirus E4-ORF1, the functional consequences for such interactions have not been elucidated. Here we report that, at the plasma membrane of cells, the adenovirus E4-ORF1 oncoprotein selectively and potently stimulates phosphatidylinositol 3-kinase (PI3K), triggering a downstream cascade of events that includes activation of both protein kinase B and p70S6-kinase. This activity of E4-ORF1 could be abrogated by overexpression of its PDZ-protein targets or by disruption of its PDZ domain-binding motif, which was shown to mediate complex formation between E4-ORF1 and PDZ proteins at the plasma membrane of cells. Furthermore, E4-ORF1 mutants unable to activate the PI3K pathway failed to transform cells in culture or to promote tumors in animals, and drugs that block either PI3K or p70S6-kinase inhibited E4-ORF1-induced transformation of cells. From these results, we propose that the transforming and tumorigenic potentials of the adenovirus E4-ORF1 oncoprotein depend on its capacity to activate PI3K through a novel PDZ protein-dependent mechanism of action.