Human hepatoma cells (HepG2 and HUH7) transfected with a plasmid (pHBV1004) containing the transcription units for the major surface antigen (S) mRNA and the X mRNA of hepatitis B virus (HBV) secreted surface antigen (HBsAg) into the culture medium. A frameshift mutation in the X gene carried by pHBV1004 greatly reduced HBsAg production by cells transfected with an equivalent amount of the mutant (pHBV1004-B). The mutation could be complemented by cotransfection with a plasmid (pSV2HBX) containing the X structural gene under control of the SV40 early promoter. HBsAg production by cells cotransfected with pHBV1004-B and pSV2HBX was equivalent to that in cells transfected with the parent plasmid (pHBV1004) alone. Levels of HBsAg production were directly related to the amount of S mRNA produced, showing that the X-gene product (HBxAg) can modulate expression of the S gene.