Nitric oxide appears to play a central role in the pathogenesis of many inflammatory disorders. We have previously shown that there is an enhanced intrahepatic expression of the inducible nitric oxide synthase (iNOS) gene during chronic hepatitis B virus infection, and that viral X protein (HBx) transcriptionally activates this cellular gene, but the molecular basis for this activation remains to be defined. We aimed to explore the involvement of different cis-acting elements of the human iNOS promoter in the HBx-mediated up-regulation as well as the effect of the intracellular distribution of the HBx on its transacting function. Cotransfection of human hepatocyte-derived cells with wild-type or mutated iNOS promoter and with an HBx expression vector showed that functional inactivation of the proximal nuclear factor kappaB (NF-kappaB)-binding site of the iNOS promoter markedly reduced the HBx-mediated transcriptional activity. Mobility shift assays showed increased DNA-protein complexes comprising mainly the p50 and p65 members of NF-kappaB family in the nuclear extracts from HBx-transfected cells. Transient transfection experiments with HBx-expressing plasmids containing distinct cellular localization sequences showed that cytoplasmic location of this viral protein activated the iNOS promoter but when HBx was targeted to the nucleus, the HBx-induced luciferase activity was almost completely abrogated. In conclusion, cytoplasmic location of HBx protein is essential for the transcriptional activation of the iNOS gene through the nuclear translocation of p50-p65 heterodimers.