We report here on a transactivating function of HBV DNA. The effect is shown by stimulation of transient expression of pSV2cat DNA in cotransfected human liver CCL13 cells. Transfection experiments with plasmid constructs containing different HBV DNA fragments and Northern analyses of RNA from cells transfected with these recombinant plasmids indicate that a transactivating function is encoded within the X-ORF. A frameshift mutation within the X gene causes loss of activity thus demonstrating requirement of a protein. The increase in the level of CAT-specific RNA suggests that the transactivation is by transcriptional enhancement. Constitutive expression of the transactivator function was also observed in cells stably transfected with HBV DNA. A number of eukaryotic promoters, SV40-early, HSV-TK, HTLV-I and RSV LTRs were responsive to transactivation by HBV DNA. However, the MMTV LTR and the human metallothionein promoter (MTIIA) were considerably less responsive than the others. The transactivational potential of HBV DNA was much higher in human cells and cells of higher primates than in rodent cells, thereby indicating interacting cellular factors. These results introduce additional considerations for the role of HBV in the development of hepatocellular tumors.