Hepatitis B virus X gene codes for a small basic cytoplasmic protein and is able to transactivate viral and cellular genes, although X protein exhibits no DNA-binding activity. The mechanism of transactivation by X protein has been suggested to be via protein-protein interaction(s). X protein had amino acid sequences homologous to the functionally essential domain of Kunitz-type serine protease inhibitors, and these sequences were indispensable for transactivation function. X protein activated X-gene transcription itself and an X-responsive element were localized in their minimal promoter. Furthermore, tumor suppressor gene product p53, but not mutant p53, repressed X-gene transcription from the minimal promoter, indicating that X protein disrupts the function of normal p53, which represses transcription of X gene or cellular gene. Data suggest that inhibition of a hepatic serine protease by X protein leads to eliminate the suppressor effect of p53 on the basic transcription machinery in nucleus.