A new hepatitis B virus (HBV) transcript of about 2.2 kilobases was identified in HBV DNA-transfected human hepatoma cells. The 5' terminus of this viral RNA appears to map at one or more of the precore initiation sites, contains a deletion of 1,223 bases corresponding to the last codon of the core gene to the middle of the surface antigen gene, and terminates at the 3' polyadenylation site used by the other known HBV RNAs. The junction region of the deleted sequences showed the conserved splice donor and acceptor GT-AG sequences. Moreover, when a mutant HBV DNA in which the splice acceptor site was changed from AG to CG was transfected into human hepatoma cells, no 2.2-kilobase RNA was detected, further suggesting that this RNA represents a spliced transcript. The core gene, although an amino acid shorter, still encoded a functional viral core protein in complementation experiments. Sequence analysis of the cDNA of the 2.2-kilobase RNA suggests that this transcript can potentially encode a new protein that comprises the reverse transcriptase domain of HBV. However, genetic analysis using a transient DNA transfection system suggests that the gene product(s) of this transcript is not essential for viral replication. The function of this transcript remains to be studied.