The mechanisms by which the human T-cell leukemia virus type I (HTLV-I) Tax oncoprotein deregulates cellular signaling for oncogenesis have been extensively studied, but how Tax itself is regulated remains largely unknown. Here we report that Tax was negatively regulated by PDLIM2, which promoted Tax K48-linked polyubiquitination. In addition, PDLIM2 recruited Tax from its functional sites into the nuclear matrix where the polyubiquitinated Tax was degraded by the proteasome. Consistently, PDLIM2 suppressed Tax-mediated signaling activation, cell transformation, and oncogenesis both in vitro and in animal. Notably, PDLIM2 expression was down-regulated in HTLV-I–transformed T cells, and PDLIM2 reconstitution reversed the tumorigenicity of the malignant cells. These studies indicate that the counterbalance between HTLV-I/Tax and PDLIM2 may determine the outcome of HTLV-I infection. These studies also suggest a potential therapeutic strategy for cancers and other diseases associated with HTLV-I infection and/or PDLIM2 deregulation.