The HBx protein of hepatitis B virus (HBV) is a small transcriptional transactivator that is essential for infection by the mammalian hepadnaviruses and is thought to be a cofactor in HBV-mediated liver cancer. HBx stimulates signal transduction pathways by acting in the cytoplasm, which accounts for many but not all of its transcriptional activities. Studies have shown that HBx protein activates Ras and downstream Ras signaling pathways including Raf, mitogen-activated protein (MAP) kinase kinase kinase (MEK), and MAP kinases. In this study, we investigated the mechanism of activation of Ras by HBx because it has been found to be central to the ability of HBx protein to stimulate transcription and to release growth arrest in quiescent cells. In contrast to the transient but strong stimulation of Ras typical of autocrine factors, activation of Ras by HBx protein was found to be constitutive but moderate. HBx induced the association of Ras upstream activating proteins Shc, Grb2, and Sos and stimulated GTP loading onto Ras, but without directly participating in complex formation. Instead, HBx is shown to stimulate Ras-activating proteins by functioning as an intracellular cytoplasmic activator of the Src family of tyrosine kinases, which can signal to Ras. HBx protein stimulated c-Src and Fyn kinases for a prolonged time. Activation of Src is shown to be indispensable for a number of HBx activities, including activation of Ras and the Ras-Raf-MAP kinase pathway and stimulation of transcription mediated by transcription factor AP-1. Importantly, HBx protein expressed in cultured cells during HBV replication is shown to activate the Ras signaling pathway. Mechanisms by which HBx protein might activate Src kinases are discussed.