Rhizomania of sugar beet, caused by Beet necrotic yellow vein virus (BNYVV), is characterized by excessive lateral root (LR) formation leading to dramatic reduction of taproot weight and massive yield losses. LR formation represents a developmental process tightly controlled by auxin signaling through AUX/IAA-ARF responsive module and LATERAL ORGAN BOUNDARIES DOMAIN (LBD) transcriptional network. Several LBD transcription factors play central roles in auxin-regulated LR development and act upstream of EXPANSINS (EXPs), cell wall (CW)-loosening proteins involved in plant development via disruption of the extracellular matrix for CW relaxation and expansion. Here, we present evidence that BNYVV hijacks these auxin-regulated pathways resulting in formation LR and root hairs (RH). We identified an AUX/IAA protein (BvAUX28) as interacting with P25, a viral virulence factor. Mutational analysis indicated that P25 interacts with domains I and II of BvAUX28. Subcellular localization of co-expressed P25 and BvAUX28 showed that P25 inhibits BvAUX28 nuclear localization. Moreover, root-specific LBDs and EXPs were greatly upregulated during rhizomania development. Based on these data, we present a model in which BNYVV P25 protein mimics action of auxin by removing BvAUX28 transcriptional repressor, leading to activation of LBDs and EXPs. Thus, the evidence highlights two pathways operating in parallel and leading to uncontrolled formation of LRs and RHs, the main manifestation of the rhizomania syndrome.