The E7 protein encoded by the oncogenic human papillomavirus type 16 has been shown to bind and inactivate insulin-like growth factor-binding protein-3 (IGFBP-3), the pro-apoptotic product of a tumour suppressor gene; however, the molecular mechanism underlying E7-induced inactivation of IGFBP-3 remained uncertain. In this study, we map the IGFBP-3-binding domain for E7 to the nuclear localization signal in the conserved C-terminal domain of IGFBP-3. Moreover, we demonstrate that both proteins interact in the nucleus and that E7 induces polyubiquitination and proteasome-dependent proteolysis of nuclear IGFBP-3 in cervical cancer cells. This leads to a dramatic shortening of the half-life of nuclear IGFBP-3, whereas the stability of an E7-non-binding IGFBP-3 mutant is not affected by E7. Finally, we show that E7-mediated destruction of nuclear IGFBP-3 correlates with the inhibition of IGFBP-3-induced apoptotic cell death. These data are consistent with E7-induced ubiquitin/proteasome-dependent inactivation of nuclear IGFBP-3.