The HBx (X protein of hepatitis B virus) is a promiscuous transactivator implicated to play a key role in hepatocellular carcinoma. However, HBx-regulated molecular events leading to deregulation of cell cycle or establishment of a permissive environment for hepatocarcinogenesis are not fully understood. Our cell culture-based studies suggested that HBx had a profound effect on cell cycle progression even in the absence of serum. HBx presence led to an early and sustained level of cyclin-cdk2 complex during the cell cycle combined with increased protein kinase activity of cdk2 heralding an early proliferative signal. The increased cdk2 activity also led to an early proteasomal degradation of p27(Kip1) that could be reversed by HBx-specific RNA interference and blocked by a chemical inhibitor of cdk2 or the T187A mutant of p27. Further, our co-immunoprecipitation and in vitro binding studies with recombinant proteins suggested a direct interaction between HBx and the cyclin E/A-cdk2 complex. Interference with different signalling cascades known to be activated by HBx suggested a constitutive requirement of Src kinases for the association of HBx with these complexes. Notably, the HBx mutant that did not interact with cyclin E/A failed to destabilize p27(Kip1) or deregulate the cell cycle. Thus HBx appears to deregulate the cell cycle by interacting with the key cell cycle regulators independent of its well-established role in transactivation.