Transforming growth factor–beta1 (TGF-β1) is a pleiotropic cytokine with pivotal roles in the regulation of cellular functions and immune responses. In this study, we found that TGF-β1 was able to effectively suppress hepatitis B virus (HBV) replication. In the presence of TGF-β1, the level of viral replicative intermediates was dramatically decreased, both in actively dividing cells and in confluent cells. At the same time, the levels of viral transcripts, core protein, and nucleocapsid were significantly diminished by TGF-β1 treatment. Interestingly, the inhibitory activity of TGF-β1 was associated with preferential reduction of the level of pregenomic RNA compared with pre-C mRNA. Further analysis indicated that TGF-β1 might exert its antiviral effect primarily through reducing expression of the HBV core protein by transcriptional regulation instead of posttranscriptional modification. Conclusion: TGF-β1 may play a dual role in HBV infection, in the suppression of immune responses against viral infection and in the direct inhibition of viral replication, resulting in minimization of liver damage in patients with chronic hepatitis. (HEPATOLOGY 2007.)