Integration of the human and woodchuck hepatitis B viruses (HBV and WHV) in host chromosomes has been implicated in the development of hepatocellular carcinoma by different cis- and trans-acting mechanisms. The structure and coding capacity of abundant HBV and WHV transcripts of abnormal sizes produced from integrated viral sequences in one human and two woodchuck liver tumors were examined. Analysis of cDNA clones revealed in all cases hybrid virus-cell transcripts containing sequences of the viral surface gene, the viral enhancer, and different truncated versions of the viral X transactivator. Cotranscribed cellular sequences showing no significant coding function provided the signals for transcription termination. In two transcripts, the HBX and WHX genes truncated at carboxy terminal positions conserved transcriptional trans-acting capacity in transient transfection assays. These results lend support to the hypothesis that the integrated hepadnavirus X transactivator might participate in the development of woodchuck as well as human liver tumors by a common trans-acting mechanism.