The hepatitis B virus X protein (HBx) plays essential roles in viral replication and the generation of hepatocellular carcinoma. In spite of a large number of suggestive cellular targets and functions, a clear picture of its mechanism(s) of action has remained elusive. In this report, we continue to characterize its recently described mitochondrial association and further examine its impact on mitochondrial functions. HBx was previously shown to bind to a voltage-dependent anion channel (VDAC3) and alter the mitochondrial transmembrane potential (Delta Psi(m)). Here we show that, as a consequence of association with mitochondria, HBx constitutively induces activation of transcription factors, which include STAT-3 and NF-kappa B. This induction of activation was sensitive to the antioxidants N-acetyl L-cysteine and pyrrolidine dithiocarbamate, as well as to overexpression of Mn-superoxide dismutase. These results therefore implicate a potential role of reactive oxygen species (ROS) in a process that ultimately leads to the activation of STAT-3 and NF-kappa B. Evidence is also presented for the HBx-induced generation of ROS. The ability of HBx to induce the activation of STAT-3 and NF-kappa B was demonstrated by mobility shift and reporter gene expression assays with lysates from HBx-transfected HepG2 cells. A C-terminal HBx deletion mutant, HBx Delta 99, failed to bind VDAC3 and activate STAT-3 and NF-kappa B. These studies shed new light on the physiological significance of HBx's mitochondrial association and its role in inducing oxidative stress which can contribute to the liver disease pathogenesis associated with the hepatitis B virus infection.