Mutational analysis of the hepatitis B virus (HBV) nucleocapsid promoter previously demonstrated that a regulatory sequence element (CpE) located between -72 and -56 modulated the level of transcription from this promoter in differentiated, but not dedifferentiated, hepatoma cell lines. Using gel retardation analysis, it was shown that the formation of a complex between the nucleocapsid CpE promoter sequence and the DNA-binding proteins present in the differentiated hepatoma cell line Huh7 was inhibited from forming in the presence of either the large surface antigen promoter hepatocyte nuclear factor 3 (HNF3) binding site or an HNF3beta-specific antiserum. Purified recombinant HNF3alpha transcription factor was also shown to bind specifically to the CpE promoter sequence by gel retardation and DNase I footprinting analysis. In addition, DNase I footprinting analysis supported the suggestion that the nucleocapsid promoter region contains a second HNF3 binding site located between -112 and -86. The nucleocapsid promoter CpE regulatory element was shown to be a functional HNF3 binding site capable of mediating HNF3beta-specific transcriptional transactivation in transient transfection analysis. These results suggest that the liver-enriched family of HNF3 transcription factors is involved in regulating the level of expression from the nucleocapsid promoter, in addition to the large surface antigen promoter, and is likely to be important in the coordinate regulation of HBV transcription during infection.