Previous studies have demonstrated that the JC virus (JCV) late regulatory protein agnoprotein is phosphorylated by the serine/threonine-specific protein kinase-C (PKC) and mutants of this protein at the PKC phosphorylation sites exhibit defects in the viral replication cycle. We have now investigated whether agnoprotein phosphorylation is regulated by PP2A, a serine/threonine-specific protein phosphatase and whether JCV small t antigen (Sm t-Ag) is involved in this regulation. Protein-protein interaction studies demonstrated that PP2A associates with agnoprotein and dephosphorylates it at PKC-specific sites. Sm t-Ag was also found to interact with PP2A and this interaction inhibited the dephosphorylation of agnoprotein by PP2A. The interaction domains of Sm t-Ag and agnoprotein with PP2A were mapped, as were the interaction domains of Sm t-Ag with agnoprotein. The middle portion of Sm t-Ag (aa 82-124) was found to be critical for the interaction with both agnoprotein and PP2A and the N-terminal region of agnoprotein for interaction with Sm t-Ag. To further understand the role of Sm t-Ag in JCV regulation, a stop codon was introduced at Ser90 immediately after splice donor site of the JCV early gene and the functional consequences of this mutation were investigated. The ability of this mutant virus to replicate was substantially reduced compared to WT. Next, the functional significance of PP2A in JCV replication was examined by siRNA targeting. Downregulation of PP2A caused a significant reduction in the level of JCV replication. Moreover, the impact of Sm t-Ag on agnoprotein phosphorylation was investigated by creating a double mutant of JCV, where Sm t-Ag stop codon mutant was combined with an agnoprotein triple phosphorylation mutant (Ser7, Ser11 and Thr21 to Ala). Results showed that double mutant behaves much like the triple phosphorylation mutant of agnoprotein during viral replication cycle, which suggests that agnoprotein might be an important target of Sm t-Ag with respect to the regulation of its phosphorylation. Collectively, these results suggest that there is an interplay between agnoprotein, Sm t-Ag and PP2A with respect to the regulation of JCV life cycle and this could be important for the progression of the JCV-induced disease, PML.