The hepatitis B virus (HBV) large surface antigen (LHBS) mutant with deletion at the pre-S(2) region accumulates in endoplasmic reticulum (ER) and is associated with HBV-induced hepatocellular carcinogenesis. In this study, we found that the pre-S(2) LHBS mutant directly interacts with the Jun activation domain-binding protein 1 (JAB1). Association of pre-S(2) LHBS with JAB1 dissociated JAB1 from the JAB1/IRE1 complex in ER. The free (active) JAB1 then translocated into cell nuclei and rendered the Cdk inhibitor p27(Kip1) to cytosolic proteasome for degradation. The pre-S(2) LHBS mutant induced hyperphosphorylation of tumor suppressor retinoblastoma (RB) via cyclin-dependent kinase 2 (Cdk2), a downstream molecule regulated by p27(Kip1). This effect is independent of the ER stress signaling pathway. The transgenic mice carrying the pre-S(2) mutant LHBS gene also exhibited Cdk2 activation, p27(Kip1) degradation, as well as RB hyperphosphorylation. The mouse hepatocytes exhibited morphologic abnormalities such as chromatin condensation, multinucleation, and dysplasia of hepatocytes. In summary, the pre-S(2) LHBS mutant causes p27(Kip1) degradation through direct interaction with JAB1. The pre-S(2) mutant LHBS is suggested to be a potential oncoprotein for HBV-related hepatocellular carcinoma.