We previously developed a transgenic (Tg) murine lineage (B10.S-Tg31e), which secretes the hepatitis B e Ag (HBeAg) into the serum at a concentration of 10 ng/ml. This serum concentration was sufficient to render B10.S-Tg31e mice functionally tolerant at the T cell but not B cell level. To determine the tolerogenic potential of an intracellular form of this Ag, namely the hepatitis B core Ag (HBcAg), expressed outside the thymus, the B10.S-Tg10c lineage was developed. In B10.S-Tg10c mice the HBcAg is expressed as an intracellular "self"-Ag predominantly in the liver, and cannot be detected in the serum, the thymus or in nonthymic lymphoid tissue. Despite the liver-specific and intracellular location of this transgenic self-protein, B10-STg10c mice demonstrate a significant degree of HBcAg-specific T cell tolerance at the level of T cell proliferation. Similarly, in vivo anti-HBc antibody production after HBcAg immunization is significantly reduced as compared with non-Tg littermate controls. No spontaneous anti-HBc antibody is produced in B10.S-Tg10c mice, however, adoptive transfer of HBcAg-specific T cells from non-Tg B10.S mice elicits anti-HBc specific "autoantibody" production. Interestingly, antibodies with specificity for the HBeAg as well as the HBcAg are produced. Antibody production in B10.S-Tg10c mice adoptively transferred with T cells indicates that sufficient native HBcAg can gain access to the extracellular compartment to engage HBcAg-specific B cells that are clearly not tolerant in this model. No liver injury was observed as a consequence of HBcAg expression, even in B10.S-Tg10c mice adoptively transferred with HBcAg-specific T cells. Unless HBcAg is unique in this regard, these results suggest that organ-specific, intracellular self-Ag may be released during normal cell turnover in sufficient concentrations to elicit systemic T cell tolerance. B10.S-Tg10c mice also serve as an immunologic model system for chronic infection with the HBeAg-negative mutant of the hepatitis B virus.