Many viruses possess complex mechanisms involving multiple gene products and cis-regulatory elements in order to achieve a fine control of their gene expression at both transcriptional and posttranscriptional levels. Hepatitis B virus (HBV) and retroviruses share many structural and functional similarities. In this study, by genetic and biochemical analyses, we have demonstrated the existence of a novel genetic element within the HBV genome which is essential for high-level expression of viral gene products. This element is located 3' to the envelope coding region. We have shown that this genetic element is cis acting at the posttranscriptional level and that its function is exerted at the level of RNA processing as part of transcribed sequences. This RNA element is also functional in the context of a heterologous gene. Similar to the function of Rev-Rev response element interaction of human immunodeficiency virus type 1, this element appears to inhibit the splicing process and facilitate the transport and utilization of HBV transcripts.