The pathogenesis of chronic liver disease (CLD) due to persistent hepatitis B virus (HBV) infection has not been defined, but the disease activity is believed to correlate with the presence of hepatitis B e-antigen (HBeAg) antigenemia and high viremia. The molecular characterization of an HBV mutant isolated from an HBeAg-negative patient with severe CLD required amplification of the circulating HBV DNA (2 pg/ml) by the polymerase chain reaction (PCR). Direct sequencing of the nucleotides from five independent amplifications of the conserved precore region consistently revealed a G to A mutation in each of the two terminal codons of the precore region. Codon 28 was mutated from tryptophan-encoding TGG to a translational stop codon, TAG; codon 29 preceding the core initiation codon was changed from GGC to GAC. For biologic evaluation of these mutations on HBV replication and expression of HBeAg in vitro, HepG2 cells were transfected with cloned, recicularized mutant HBV DNA. The transfected cells contained subviral core particles in the cytoplasm and secreted mature HBV, without HBeAg, into the medium. The findings present the first evidence that complete HBV genomes can be amplified by PCR and are replication-competent in vitro. The data also indicate that HBeAg is not necessary for replication of HBV and furthermore suggest that HBeAg is not required for the progression of HBV-induced CLD.