Transcription of the HBV 2.1 kb RNAs is regulated by the major surface antigen promoter. Previously, transient transfection analysis identified regulatory sequence elements in this promoter located between -189 and +1 which govern the level of transcription from this promoter and appear to bind only ubiquitous transcription factors including NF1, Sp1 and NF-Y. However, in vivo transcription analysis in transgenic mice has demonstrated that the expression of the HBV 2.1 kb RNAs is largely restricted to hepatocytes. In this study, the presence of a functional HNF3 transcription factor binding site located between -231 and -240 in the major surface antigen promoter suggests that the in vivo liver-restricted expression of the 2.1 kb RNAs may be governed by this liver-enriched transcription factor. The identification of a functional HNF3 binding site upstream of the DNA polymerase open reading frame also supports the contention that transient transfection analysis may fail to detect all of the cis-acting regulatory sequence elements involved in modulating the level of transcription from the viral promoters.