To search for events underlying reduction of peripheral viremia and integration of hepatitis B virus (HBV) DNA into the liver cell genome in long-term virus carriers with hepatocellular carcinoma, paired samples of liver and tumor tissue were analyzed by molecular hybridization and immunological methods. Most tumor tissues contained integrated viral DNA; in none was extrachromosomal HBV DNA detected. Integrated HBV DNS was also found in peritumor liver tissue in the majority of patients. However, liver of patients either with or without peripheral viremia also contained free HBV DNA and replicative intermediates. In three nonviremic patients with replicative HBV DNA in liver, viral core antigen expression was markedly reduced or absent, whereas viral envelope protein (surface antigen) expression was normal. In one case, replicative intermediates in liver were sensitive to DNase I digestion, indicating that viral DNA was not encapsidated in normal viral core particles. These results suggest that decreased or defective core antigen production can lead to reduced viremia associated with blocked virus assembly/secretion and accumulation of unencapsidated HBV DNA replicative intermediates in the liver cell. Accumulation of such HBV DNA molecular forms in the liver may lead to an increased propensity for HBV DNA to integrate into the host genome, which has been found with high frequency in hepatic neoplasms from patients infected with hepatitis B virus.