Chronic infection with hepatitis B virus (HBV) is a major risk factor for the development of hepatocellular carcinoma (HCC). The pathogenesis of HBV-induced malignant transformation is, however, incompletely understood. HBx, the protein encoded by the X open reading frame, is a transcriptional activator that has been implicated in hepatocarcinogenesis. HBx inhibits the function of the tumour suppressor protein p53 in what is thought to be an early event in hepatocyte transformation before the later accumulation of inactivating p53 point mutations. HBx inhibits apoptosis but also exerts pro-apoptotic effects. The effects of HBx on apoptosis may be important not only for the development of HCC but also for the establishment of HBV infection. Further implication of HBx in hepatocyte transformation has been the demonstration that it inhibits the repair of damaged hepatocyte DNA. This effect may be mediated by interaction with p53 or through binding to the damaged DNA binding protein (DDB), which plays an accessory role in nucleotide excision repair. In addition, HBx activates cell signalling cascades involving mitogen-activated protein kinase (MAPK) and Janus family tyrosine kinases (JAK)/signal transducer and activators of transcription (STAT) pathways. The implications of these modulating effects of HBx are not fully understood, but they are likely to have wide-ranging effects on hepatocyte proliferation, apoptosis and the regulation of cell growth checkpoints. The cellular functions ascribed to HBx are unusually diverse, and defining the biologically important role of HBx during HBV replication will go some way to understanding the sequelae of chronic HBV infection.