It is well known that several inflammatory cytokines can modulate hepatocellular gene expression in a complex physiological process known as the hepatic acute-phase response. Since hepatitis B virus (HBV) characteristically induces a vigorous lymphomononuclear inflammatory response in the liver during acute and chronic hepatitis, it is possible that hepatocellular HBV gene expression may also be modulated by one or more of the cytokines produced by these cells. Using bacterial lipopolysaccharide (LPS) as a surrogate inducer of inflammatory cytokines in vivo, we have tested this hypothesis in a transgenic mouse model system. In experiments with two independent transgenic mouse lineages that express the HBV envelope region under the control of either HBV or cellular promoters, we observed a 50 to 80% reduction in the hepatic steady-state content of a 2.1-kb HBV mRNA following administration of a single intraperitoneal dose of LPS. The regulatory influence of several inflammatory cytokines known to be induced by LPS was also examined in this system. The negative regulatory effect of LPS was consistently reproduced by the administration of a single nontoxic dose of tumor necrosis factor alpha, and it was occasionally observed following the administration of high doses of alpha interferon and interleukin-6, while no effect was detectable in response to high-dose interleukin-1 alpha or to gamma interferon. These observations suggest that tumor necrosis factor alpha and perhaps other cytokines may activate a heretofore unsuspected intracellular pathway that negatively regulates HBV gene expression. The intracellular mechanism(s) responsible for this effect and its pathophysiologic relevance remain to be elucidated.