Chronic hepadnavirus infection is associated with hepatocellular carcinoma (HCC) in natural hosts such as humans, woodchucks, and Beechey ground squirrels. Several possible oncogenic mechanisms have been identified, including a potential role of the hepadnavirus x (hbx) gene, which transactivates transcription regulated by certain cis-acting sequences, e.g. regulatory sequences of the hepatitis B virus (HBV) and heterologous regulatory sequences of other viruses and cellular genes. The oncogenic potential of hbx is suggested by the observation of HCCs in hbx transgenic mice, the oncogenic transformation of cells expressing hbx in culture, and the transactivation of oncogenes c-myc and c-jun by hbx. Cis-activation of cellular oncogenes N-myc and c-myc by viral promoter insertion has been a common finding in woodchuck hepatitis virus (WHV)-associated HCCs of woodchucks. No such cis-activation of any cellular gene has been shown in virus-associated HCCs of ground squirrels or humans. Amplification and overexpression of the c-myc gene has been a common finding in HCCs of ground squirrels, and is rare in woodchuck or human HCCs. Point mutations in the p53 gene and allelic deletion of p53 have been common findings in human HCCs, but have not been found in HCCs in woodchucks and have been found rarely in ground squirrels. How each of these genetic changes in the different hosts contributes to HCC remains to be determined, but apparently different changes in different HCCs of hepadnavirus-infected hosts suggest that several separate genetic events may contribute to the development of HCC. These events may differ in each host, and some may not result from a direct virus-specific mechanism. Chronic hepadnavirus infection is often associated with chronic necroinflammatory liver disease and cirrhosis, a pathologic process common to several other risk factors for HCC. This suggests that this pathologic process (necroinflammatory disease) may be hepatocarcinogenic regardless of the inciting agent. Thus hepadnavirus infection may play an important role in the development of HCC by causing chronic hepatitis and HCC with the same mechanisms by which other risk factors for HCC cause chronic necroinflammatory liver disease and HCC.