We have studied the genetic profile of the host genome and hepatitis B virus (HBV) in HBV-associated primary hepatocellular carcinoma (HCC). Comparative analyses of HCC cell line Hep 40 and the original biopsy specimens showed the episomal and replicating form of HBV only in the biopsy specimen from nontumor (NT) cirrhotic liver tissue, where a molecular change in the 1p36 region was detected (NT tissue showed a normal 46XY karyotype). In contrast, only integrated HBV was detected in HCC tumor (T) tissue and Hep 40 cells. Two HBV integration sites were identical in HCC tissue and the hyperdiploid Hep 40 cell line, where genetic alteration in the 1p36 region was identified. These data indicate that viral replication is ongoing only in NT cirrhotic-hyperplastic, chromosomally normal tissue with evidence for genetic instability. Only the tumor cell with altered genotype has virus integrated. (Hepatology 1995; 22:1393–1398).