Hepatitis B virus (HBV) is a major etiological factor associated with hepatocarcinogenesis, but its role in the transformation process remains unclear. We previously documented the accumulation of genetic alterations in a HBV-transfected cell line. In the present study, we addressed the effect of HBV and its replication on the genome and phenotype of the host cell. Parental HBV-free Hep G2 cells and two HBV-transfected variant lines Hep G2215 and Hep G2T14. 1, which do and do not replicate HBV, respectively, were used to monitor genetic alterations in conjunction with HBV profile in vitro and in vivo. Comparison of in vitro growth rates showed that Hep G2T14.1 cells grew more rapidly, while Hep G2215 cells, replicating HBV, grew slower than parental Hep G2 cells. Molecular analysis confirmed an HBV integration site (s) in both variants, and reverse trancriptase-polymerase chain reaction (RT-PCR) amplification documented expression of transcript for the HBX protein, which has recently been implicated in the compromised efficiency of cellular DNA repair. Tumorigenisity testing indicate a comparable rate of tumor formation in nude mice of both HBV-transfected variants, giving rise to tumors in 3 weeks; parental Hep G2 cells did not form tumors in nude mice. Tumor tissue from nude mice injected with Hep G2T14.1 cells showed no change in HBV status. However, a new HBV integration site was detected in tumor tissue from Hep G2215-injected mice. Two cell lines derived from the respective tumor tissue grew in vitro at rates compatible to those observe before passage in nude mice. The Hep G2215 tumor-derived line continued to replicate HBV, while HBV status remained unchanged in the Hep G2T14.1 tumor-derived line. Unique genetic alterations were detected in both transfected cell lines, and Hep G2215 cells particularly showed cellular mosaicism and clonal selection when analyzed after the passage in nude mice. Further genetic alterations were detected in tumor-derived cell lines. Interestingly, the de novo genetic alterations in the Hep G2215 cells, which maintain the ability to replicate HBV, included a new HBV integration site, several chromosome rearrangements and loss of heterozygosity (LOH) of one p53 allele. Western analyses of p21/Waf1 protein indicate an upregulation of the protein in cells that replicate HBV. Based on the combined data, we hypothesize that the genetic alterations in the cellular genome could also be generated as a function in the presence of HBV and HBV replication. Possible mechanisms that could be implicated in cumulative mutagenetic events are discussed.