Woodchuck hepatitis virus (WHV), similar to human hepatitis B virus, causes acute liver inflammation that can progress to chronic hepatitis and hepatocellular carcinoma. WHV also invades cells of the host lymphatic system, where it persists for life. We report here that acute and chronic hepadnavirus hepatitis is characterized by a profound difference in the expression of class I major histocompatibility complex (MHC) molecules on the surface of infected hepatocytes and, notably, lymphoid cells. While acute WHV infection is accompanied by the enhanced hepatocyte surface presentation of class I MHC antigen and upregulated transcription of the relevant hepatic genes, inhibition of class I antigen display on liver cells is a uniform hallmark of chronic WHV infection. This inhibition in chronic hepatitis occurs despite augmented (as in acute infection) expression of hepatic genes for class I MHC heavy chain, beta(2)-microglobulin, and transporters associated with antigen processing (TAP1 and TAP2). Further, the class I antigen inhibition is not related to the histological severity of hepatocellular injury, the extent of lymphocytic infiltrations, the level of intrahepatic gamma interferon induction, or the hepatic WHV load. Importantly, the antigen expression is also inhibited on organ lymphoid cells of chronically infected hosts. The results obtained in this study demonstrate that the defective presentation of class I MHC molecules on cells supporting persistent WHV replication is due to viral posttranscriptional interference. This event may diminish the susceptibility of infected hepatocytes to virus-specific T-cell-mediated elimination, hinder virus clearance, and deregulate the class I MHC-dependent functions of the host immune system. This multifarious effect could be critical for perpetuation of liver damage and evasion of the antiviral immunological surveillance in chronic infection and therefore could be supportive of hepadnavirus persistence.