Evidence is presented that the previously cloned type I duck interferon (DuIFN) cDNA encodes a homologue of mammalian interferon-alpha (IFN-alpha). Recombinant DuIFN-alpha was used to study the inhibition of duck hepatitis B virus (DHBV) replication in primary hepatocytes in order to determine the IFN-sensitive steps of the virus replication cycle. IFN-treated cells accumulated two- to threefold-lower amounts of viral RNA transcripts early during infection, when IFN was added before virus. This reduction was not due to inhibition of virus entry since initial covalently closed circular DNA levels were not decreased in IFN-treated cells. Interestingly, the inhibitory effect of IFN on viral RNA levels was not observed in cells infected with a mutant DHBV that fails to synthesize core protein, suggesting that an uncharacterized core protein-mediated enhancing effect is blocked by IFN. When IFN was added at 4 days postinfection, encapsidated viral RNA pregenomes disappeared from infected cells within 3 days. This depletion was not simply due to conversion of pregenomes to DNA since depletion was not blocked by phosphonoformic acid, an inhibitor of the viral reverse transcriptase. The intracellular concentration of intact nucleocapsids was reduced, suggesting that in the presence of IFN pregenome-containing capsids were selectively depleted in hepatocytes. Thus, two steps in DHBV replication that involve the viral core protein were inhibited by DuIFN-alpha.