Previously, we showed that short hairpin RNAs (shRNAs) targeting hepatitis B virus (HBV) potently inhibit the virus in a transient mouse model. However, subsequent studies showed that expression of these hairpins (as well as hairpins targeting human alpha-1 antitrypsin) from adeno-associated virus vectors (AAV) cause fatality in mice. We used rational design to develop significantly more potent second-generation HBV RNAi triggers embedded within the endogenous microRNA (miRNA) miR-30. A statistical analysis of thermodynamic parameters revealed characteristics important for RNAi potency. Small interfering RNAs (siRNAs) and shRNAs are known to compete with each other and with endogenous miRNAs for the miRNA machinery. We show that exogenous miRNA expression cassettes can compete with exogenous siRNAs, shRNA, and miRNAs as well as with endogenous miRNAs. Preliminary studies demonstrate that miRNA-based HBV RNAi expression from AAV vectors is well tolerated in mice.