Transcription and replication of hepatitis delta virus (HDV) RNA are performed by the cellular enzyme RNA polymerase II (Pol II). As DNA is the normal template for Pol II, the enzyme must undergo template switching. The mechanism for this is unknown, but since HDV RNA can form a rod-like molecule by extensive intramolecular base pairing, it has been suggested that a double-stranded region(s) of HDV RNA serves as a recognition site for Pol II. A bidirectional promoter has been identified previously on HDV cDNA (T. B. Macnaughton, M. R. Beard, M. Chao, E. J. Gowans, and M. M. C. Lai, Virology 196:629-636, 1993). In the present study, genomic RNA corresponding to this region was able to direct the synthesis of antigenomic RNA in a nuclear extract transcription reaction, whereas genomic RNA species containing a mutation that resulted in a replication-defective phenotype were unable to do so. Thus, this region, the location of which is defined as nucleotides 1608 to 1669 on the basis of a highly conserved structure, represents a RNA-RNA promoter. Computer analysis of the RNA secondary structure predicted that the promoter contains two bulge regions in a stem-loop structure which encompasses a GC-rich motif. This predicted model was confirmed by enzyme digestion and primer extension analysis. The promoter is located at one end of the rod and has some homology with the simian virus 40 late promoter. A number of other mutations were introduced within this region, and expression plasmids were constructed to examine the effects of mutations in the promoter on HDV replication. Disruption of the overall secondary structure, particularly the bulge regions, totally inhibited HDV RNA replication.