The polyadenylation signal of mammalian hepadnaviruses is unusual in that its hexanucleotide element is the variant UAUAAA rather than AAUAAA. This signal functions inefficiently and must be augmented by multiple activator elements located in the upstream 400 nucleotides (nt) to promote efficient processing. Here we characterize one of these upstream elements, termed PS2, in the ground squirrel hepatitis virus. PS2 is located within the 107 nt 5' to the UAUAAA and raises the efficiency of polyadenylation by this signal from < 10% to 50 to 60%. It can function independently of the more 5' activator elements and conversely is not required for their function. Its action is orientation dependent, and a predicted stem-loop structure within the element is not necessary for its activity. PS2 is the sole upstream element that maps within the terminal redundancy of viral genomic RNA. Thus, it is present, together with the UAUAAA, at both the 5' and 3' ends of this RNA. During genomic RNA synthesis, the poly(A) signals in the 5' repeat are bypassed, while those in the 3' copy are used. The ability of PS2 to function independently of the other, more upstream activators suggests that the absence of the latter elements from the 5' redundancy is insufficient to account for bypass of the 5' poly(A) site, as we had earlier proposed. Rather, the short distance from the cap site to the UAUAAA at the 5' end of genomic RNA actively suppresses its use, as this suppression can be experimentally relieved by increasing this distance to 230 to 400 nt.