Mouse L cells deficient in thymidine kinase (tk-) were transfected with either monomeric or dimeric circular HBV DNA and co-transformed with tk+ DNA derived from herpes simplex virus. Thymidine kinase transformed cell colonies were harvested and maintained as separate cell lines. Either HBsAg, HBeAg, or HBsAg and HBeAg were detected in culture fluids from the various cell colonies. Immunofluorescent stains of cells from colonies synthesizing HBsAg and/or HBeAg showed that these antigens were present in cytoplasm. The monomeric form of circular HBV DNA was more efficient in producing cells synthesizing large amounts of HBsAg and HBeAg than the dimeric form. The patterns of integration of HBV DNA differed between cells synthesizing HBsAg and those synthesizing HBsAg and HBeAg. This in vitro system for the expression of HBV DNA now allows a detailed study of the synthesis and function of HBeAg and the interaction of HBV DNA and the retroviral DNA present in mouse L cells. Furthermore, it may be possible to develop a hepatitis B virus vaccine based on HBeAg as the viral antigen.