There is a limited understanding of the cellular regulation of HBV gene expression in differentiated hepatocytes. We previously demonstrated that HBV replication inversely correlates with cell proliferation and DNA synthesis. In this report, temperature-induced modulation of cell growth was used as a novel approach to study HBV gene expression in the absence of indirect effects from drugs or serum deprivation. We observed markedly elevated levels of hepatic HBV mRNA expression from integrated and episomal HBV DNA at 32 degrees C. Additionally, hepatoblastoma cells cultured at 32 degrees C expressed increased levels of albumin mRNA and decreased levels of c-myc mRNA, which demonstrates that liver-derived cells cultured at low temperature exhibit characteristics of functional and differentiated hepatocytes. In transiently transfected HepG2 cells cultured at 32 degrees C, the HBV enhancer 1 activated the X promoter and core/pregenomic promoter by 7.3- and 28-fold, respectively. In the absence of enhancer 1, core/pregenomic promoter activity was 2.4-fold higher than the X promoter in HepG2 cells at 32 degrees C. In contrast, enhancer 1 exclusively activated the X promoter in transfected non-liver cells at 32 degrees C. Therefore, the core/pregenomic promoter exhibits strict liver-specificity at low temperature. This work supports the hypothesis that HBV replication and gene expression are optimal in non-activated hepatocytes, and provides a novel system for delineating molecular aspects of the HBV replication process.