Merkel cell polyomavirus (MCV) causes an aggressive human skin cancer, Merkel cell carcinoma, through expression of small T (sT) and large T (LT) viral oncoproteins. MCV sT is also required for efficient MCV DNA replication by the multifunctional MCV LT helicase protein. We find that LT is targeted for proteasomal degradation by the cellular SCF(Fbw7) E3 ligase, which can be inhibited by sT through its LT-stabilization domain (LSD). Consequently, sT also stabilizes cellular SCF(Fbw7) targets, including the cell-cycle regulators c-Myc and cyclin E. Mutating the sT LSD decreases LT protein levels and eliminates synergism in MCV DNA replication as well as sT-induced cell transformation. SCF(Fbw7) knockdown mimics sT-mediated stabilization of LT, but this knockdown is insufficient to fully reconstitute the transforming activity of a mutant LSD sT protein. Thus, MCV has evolved a regulatory system involving SCF(Fbw7) that controls viral replication but also contributes to host cell transformation.