Double-stranded linear DNA is synthesized as a minor viral DNA species by all hepadnaviruses. In a previous study (W. Yang and J. Summers, J. Virol. 69:4029-4036, 1995) we showed that virus particles containing linear DNA of the duck hepatitis B virus (DHBV) could initiate an infection of primary duck hepatocytes. In cells infected by linear DNA containing viruses the transcriptional template, covalently closed circular DNA, was formed by circularization of linear DNA by nonhomologous recombination between the two ends. This process was shown to result in viral DNA replication through multiple generations of linear DNA intermediates, a process we called illegitimate replication. In this study we showed that viruses containing linear DHBV DNA produced by engineered insertions in the r sequence, which encodes the 5' end of the pregenome, could infect hepatocytes in vivo, and these hepatocytes proceeded to carry out illegitimate replication. Nonhomologous recombination quickly produced revertants and partial revertants in which all or part of the insertion was deleted. One such partial revertant that replicated primarily through circular DNA intermediates, but which synthesized elevated levels of linear DNA, could be sustained for several days as the predominant genotype in vivo, but this mutant was eventually displaced by variants showing full reversion to legitimate replication and that synthesized normal low levels of linear DNA. Full revertants did not necessarily contain the wild-type r sequence. The results suggest that the linear DNA produced during DHBV infection initiates cycles of illegitimate replication by generating mutants with altered r sequences. Some r sequence mutants carry out a mixture of legitimate and illegitimate replication that can contribute to elevated production of linear DNA in individual cells.