Overproduction of the hepatitis B virus (HBV) large envelope polypeptide by transgenic mice containing the entire HBV envelope coding region leads to the formation of extremely long (up to 800 nm), occasionally branching, filamentous 22-nm-diameter hepatitis B surface antigen particles that accumulate within the endoplasmic reticulum of the hepatocyte and are not efficiently secreted. As the endoplasmic reticulum expands to accommodate the increasing cellular filament stores, the hepatocytes become enlarged, hydropic, and eosinophilic and also display the characteristic features of "ground-glass" cells. As filament storage progresses, the ground-glass cells undergo coagulative necrosis and the mice develop an age-dependent lesion, whose severity is related to the intracellular concentration of envelope polypeptide, that is characterized by focal hepatocellular degeneration and necrosis, lobular macrophagic inflammation, and increased serum transaminase activity. Advanced lesions demonstrate hepatocellular hyperplasia evident as lobular architectural disarray and microscopic hepatocellular nodules, many of which no longer contain detectable HBV envelope antigens. These changes may become extreme, producing a massively enlarged liver due to multifocal nodular regenerative hyperplasia. Overproduction of the large HBV envelope polypeptide exerts major structural constraints on HBV particle formation, leading to reduced secretion and progressive intracellular accumulation of hepatitis B surface antigen, which can reach sufficiently high concentrations to be directly cytotoxic to hepatocytes in this transgenic mouse system.