The carbocyclic analog of deoxyguanosine inhibits hepatitis B virus replication by greater than 95% in the hepatitis B virus-producing cell line (2.2.15) as monitored by decreases of secreted hepatitis B virus DNA, hepatitis B virus polymerase activity and intracellular episomal hepatitis B virus DNA. Transcription of hepatitis B virus RNA from chromosomally integrated hepatitis B virus DNA was unaffected. Radioactive carbocyclic 2′-deoxyguanosine was directly phosphorylated within the 2.2.15 cells and was incorporated exclusively into DNA. In contrast, radioactive deoxyguanosine was presumably metabolized through the “salvage” pathway in which the guanine was primarily incorporated into cellular RNAs. The rate of incorporation of carbocyclic 2′-deoxyguanosine in 2.2.15 cells was similar to that in the parental cell line (Hep G2), which does not contain hepatitis B virus sequences. Greater than 90% of the analog was present at internal sites within the DNA, indicating that the analog did not function as a DNA chain terminator. Kinetic analysis of the Km and Ki of dGTP and carbocyclic 2′-deoxyguanosine 5′-triphosphate, respectively, using both hepatitis B virus polymerase and DNA polymerase δ indicated that the analog is a competitive inhibitor for dGTP. Although both polymerases had similar Km's for dGTP, the Ki for carbocyclic 2′-deoxyguanosine 5′-triphosphate was about 6 times lower using the hepatitis B virus polymerase. This would indicate that, at low concentrations of intracellular carbocyclic 2′-deoxyguanosine 5′-triphosphate, the hepatitis B virus polymerase would be preferentially inhibited. We propose this to be the mechanism acting to inhibit preferentially hepatitis B virus replication in the tissue culture cells. (HEPATOLOGY 1992;16:8–12.)