The Phyllanthus amarus plant shows potential for treating hepatitis B virus. To define the mechanism of action of P. amarus, we used HepG2 2.2.15 cells, which support hepatitis B virus replication. P. amarus inhibited hepatitis B virus polymerase activity, decreased episomal hepatitis B virus DNA content and suppressed virus release into culture medium. To examine transcriptional control mechanisms, we used G26 hepatitis B virus transgenic mice, which produce serum HBsAg but neither HBcAg nor virion particles. When P. amarus was administered to transgenic mice, hepatic HBsAg mRNA levels decreased, indicating transcriptional or post-transcriptional down-regulation of the transgene. Increase in hepatitis B virus mRNA expression after stimulation of the glucocorticoid responsive element was also suppressed by P. amarus, suggesting involvement of the hepatitis B virus enhancer in this response. Disruption by P. amarus of hepatitis B virus polymerase activity, mRNA transcription and replication supports its role as an antiviral agent.