Background/Aims: The x gene of hepatitis B virus encodes a transactivating factor of 154 amino acids, termed HBx, which stimulates transcription of multiple viral and cellular genes, The transactivating function is probably associated with a tumorigenic potential of HBx, since x gene sequences, encoding functional HBx, have been repeatedly found integrated into the genome of liver carcinoma cells. Methods: To identify the transactivating domain of HBx, we constructed x gene plasmids encoding full length HBx or HBx fragments, We determined their transactivating function after cotransfection of cells, along with a plasmid that contains a reporter gene driven by the SV40 early promoter/enhancer region. Results: Our results demonstrate that a 95-amino acid fragment of HBx, encompassing amino acids 49 to 143, contains all the elements that are required for the transactivating function, Within this fragment a sequence element, encompassing amino acids 107 to 130, which contains a relatively high number of amino acids with charged side chains, appears to be crucial for the stimulation of gene expression, The influence of deletion mutations on x mRNA steady-state levels and HBx stability was examined, In essence, stable RNA and protein were produced if at least codons 1-82 or 70-154 were present in the deletion plasmids. Conclusion: This finding strongly suggests that the deletion of functional domains between codons 49 and 143, but not an instability of RNA and/or protein, was critical for the loss of transactivation.