Recombinant phage clones carrying integrated hepatitis B virus (HBV) DNA sequences have been isolated from two phage libraries made from human DNA of a hepatoma and a hepatoma-derived cell line. One clone from each library has been characterized both by restriction mapping and by electron microscopy. In one clone there is at least one complete and uninterrupted HBV genome, and in the other the HBV sequences are composed of two major subgenomic fragments inverted with respect to each other. The host-virus junctions are localized within the positions 1,700-2,600 base pairs on the physical map of the free viral genome. The pre-S/S (surface antigen gene) region is conserved between the two clones. The two clones do not have common cellular sequences nor do they contain cellular homologues to six retroviral oncogenes. For one clone, the hepatitis B surface antigen gene was found to be functional when introduced into mouse thymidine kinase-negative cells by transfection.