Rep78, the rep gene product of adeno-associated virus (AAV), has been shown to inhibit the replication of several DNA viruses. This study investigated the effects of Rep78 on replication of Hepatitis B virus (HBV) and possible mechanisms of inhibition. We have shown that HBV DNA replication and secretion of HBsAg and HBeAg in HepG2 2.2.15 cells were inhibited by Rep78. We have also demonstrated, using in vitro transcription and luciferase assay, that Rep78 binds to the HBV core promoter (HBV CP) and inhibits HBV CP activity. Furthermore, after Rep78 and HBV core protein expression plasmids were co-transfected into HepG2 cells, the expression of HBV core protein was inhibited significantly. These results suggest that Rep78 can inhibit the replication of HBV, correlating strongly with suppression of HBV CP activity.