The human PLC/PRF/5 hepatoma cell line (the Alexander cell) contains at least seven copies of hepatitis B virus (HBV) DNA integrated in its genome; but it selectively expresses the HBV surface antigen (HBsAg) gene and perhaps low levels of the core gene. We have prepared a cDNA library from PLC/PRF/5 cell poly(A)+ RNA and isolated clones containing HBV sequences. Hybridization experiments show that the great majority of HBV-specific RNAs in this cell line contain HBsAg coding sequences and are presumably derived from the HBsAg gene. Primer extension experiments show that these HBsAg mRNAs are, however, derived from multiple initiation sites in the HBsAg gene and involve two promoters: one at the 5' end of the gene that can produce a protein of 45 kDa, and one located in the pre-S region that can produce two proteins of 31 kDa and the mature HBsAg, 25 kDa, respectively. The HBV RNAs are hybrid RNA species that contain HBV sequences at their 5' ends and host DNA sequences at the 3' ends. The great majority of these hybrid RNAs are transcribed from two closely related yet distinct HBV integrants. The viral-host sequences of these two related hybrid RNAs suggest that the related HBV sequences were generated from a parental fragment via duplication, translocation, and mutagenesis. These processes may play a role in HBV-related oncogenesis.