Hepatitis B and C viruses (HBV and HCV, respectively) are associated with acute and chronic liver diseases and hepatocellular carcinoma. To elucidate the molecular status of superinfection with these two hepatitis viruses, we cotransfected the full-length or truncated version of HCV structural genes (core and envelope 1) together with the cloned HBV DNA into a human hepatoma cell line (HuH-7). Expression of HBV-specific major transcripts (3.5 and 2.1 kb), as well as HBV antigens (hepatitis B surface antigen and hepatitis B e and core antigens), was reduced about two- to fourfold by the presence of the HCV structural genes. In addition, the secretion of HBV viral particles, including the viral nucleocapsid and mature virion, was drastically suppressed about 20-fold. Analysis of the intracellular HBV core protein- associated nucleic acid indicated that the encapsidated HBV pregenomic RNA was similarly reduced about 14-fold. Deletion analysis of the HCV structural genes demonstrated that the core gene alone or the fragment containing the core protein's N-terminal 122 amino acid residues conferred the same level of suppressive activity as the full-length structural genes. By indirect immunofluorescence, we found that the core protein of HCV was located in the cytoplasm of transfected HuH-7 cells at day 3 posttransfection and was targeted to the nucleus at day 6. Thus, the kinetics of the suppressive effect exerted by HCV constructs matched the timing of core protein entrance into the nucleus. Our results substantiate the clinical finding that HBV markers are suppressed by superinfection with HCV and further imply that this inhibitory effect may occur in the processes of transcription and encapsidation of HBV pregenomic RNA and may be mediated by the core protein of HCV. The deduced amino acid sequence of the HCV core protein has revealed that it is a basic protein which contains a putative DNA-binding motif (SPRG), as well as triplicate nuclear localization signals and several putative protein kinase A and C recognition sites. These characteristics imply that the HCV core protein can also function as a gene-regulatory protein.