In primary mammalian cells, expression of oncogenes such as activated Ras induces premature senescence rather than transformation. We show that homozygous deletion of glycogen synthase kinase (GSK) 3beta (GSK3beta-/-) bypasses senescence induced by mutant Ras(V12) allowing primary mouse embryo fibroblasts (MEFs) as well as immortalized MEFs to exhibit a transformed phenotype in vitro and in vivo. Both catalytic activity and Axin-binding of GSK3beta are required to optimally suppress Ras transformation. The expression of Ras(V12) in GSK3beta-/-, but not in GSK3beta+/+ MEFs results in translocation of beta-catenin to the nucleus with concomitant up-regulation of cyclin D1. siRNA-mediated knockdown of beta-catenin decreases both cyclin D1 expression and anchorage-independent growth of transformed cells indicating a causal role for beta-catenin. Thus Ras(V12) and the lack of GSK3beta act in concert to activate the beta-catenin pathway, which may underlie the bypass of senescence and tumorigenic transformation by Ras.