Regulated gene expression and progeny production are essential for persistent and chronic infection by human pathogens, such as hepatitis B virus (HBV), which affects >400 million people worldwide and is a major cause of liver disease. In this study, we provide the first direct evidence that a liver-specific microRNA, miR-122, binds to a highly conserved HBV pregenomic RNA sequence via base-pairing interactions and inhibits HBV gene expression and replication. The miR-122 target sequence is located at the coding region of the mRNA for the viral polymerase and the 3' untranslated region of the mRNA for the core protein. In cultured cells, HBV gene expression and replication reduces with increased expression of miR-122, and the expression of miR-122 decreases in the presence of HBV infection and replication. Furthermore, analyses of clinical samples demonstrated an inverse linear correlation in vivo between the miR-122 level and the viral loads in the peripheral blood mononuclear cells of HBV-positive patients. Our results suggest that miR-122 may down-regulate HBV replication by binding to the viral target sequence, contributing to the persistent/chronic infection of HBV, and that HBV-induced modulation of miR-122 expression may represent a mechanism to facilitate viral pathogenesis.