The −1G mutant HBV is more prevalent in individuals co-infected with HIV/HBV than in individuals infected with HBV alone and in some cases is the dominant virus in circulation. This mutant is created by the deletion of a dGMP (−1G) from the guanine rich homopolymer sequence located at nts 2,085–2,090 (numbering from EcoRI site as position 1) in the HBV core gene. This deletion causes a frameshift generating a premature stop codon at 64Asn in the HBV core gene (codon 93 in the precore gene), that truncates the precore protein, precursor of the secreted hepatitis B “e” antigen (HBeAg), and the core protein which forms the viral nucleocapsid. However, the replication phenotype of the −1G mutant HBV is unknown. An in vitro cell culture model in which hepatoma cells were transiently transfected with infectious cDNAs was used to show that the −1G mutant HBV is incapable of autonomous replication and, as expected, replication was restored to wild-type (wt) levels by supplying HBV core protein in trans. Although the −1G mutation had no deleterious effect on intracellular HBV-DNA levels, high levels of −1G mutant HBV relative to wt HBV reduced virus secretion and HBeAg secretion relative to empty vector controls. Importantly, the −1G mutant HBV also caused intracellular retention of truncated precore protein in the endoplasmic reticulum (ER) and Golgi apparatus. Together, these effects may be contributing to the increased pathology observed in the setting of HIV/HBV co-infection. J. Med. Virol. 84: 1166–1176, 2012. © 2012 Wiley Periodicals, Inc.