Hepatitis B virus (HBV) X gene encodes a multifunctional protein that can regulate cellular signaling pathways, interact with cellular transcription factors, and induce hepatocellular oncogenesis. In spite of its diverse activities, the precise role of the X protein in the viral life cycle of HBV remains unclear. To investigate this question, we have produced transgenic mice that carry either the wild-type HBV genome or a mutated HBV genome incapable of expressing the 16.5-kDa X protein. Our results indicate that while the X protein is not absolutely essential for HBV replication or its maturation in transgenic mice, it can enhance viral replication, apparently by activating viral gene expression. These results demonstrate a transactivation role of the X protein in HBV replication in transgenic mice.