Hepatitis B virus (HBV) is clearly a factor in the development of hepatocellular carcinoma, but its mechanism of action remains obscure. One possibility is that the HBV integration event alters the expression of a nearby growth-regulatory cellular gene. A 9-kilobase (kb) DNA fragment containing an HBV insert plus flanking cellular sequences was cloned from a hepatoma specimen from Shanghai, People's Republic of China. Restriction mapping of the insert revealed a large inverted repeat structure consisting of both viral sequences (encompassing all of the core and pre-S regions and portions of the X and S genes) and at least 3 kb of unique cellular sequences. The virus-cell junction mapped 11 nucleotides from the DR1 region, in a position within the HBV X gene and included in the cohesive overlap region. A probe generated from 1.0 kb of the flanking cellular DNA mapped the viral insert to chromosome 17 in the region designated 17p11.2-17p12, which is near the human proto-oncogene p53. Sequence data from a portion of the flanking cellular DNA revealed a stretch of approximately 70 base pairs that showed highly significant homology with a conserved region of a number of functional mammalian DNAs, including the human autonomously replicating sequence 1 (ARS1).