Hepatocellular carcinoma (HCC), the third leading cause of cancer deaths worldwide, is most commonly caused by chronic hepatitis B virus (HBV) infection. However, whether HBV plays any direct role in carcinogenesis, other than indirectly causing chronic liver injury by inciting the host immune response, remains unclear. We have established two independent transgenic mouse lines expressing the complete genome of a mutant HBV ("preS2 mutant") that is found at much higher frequencies in people with HCC than those without. The transgenic mice show evidence of stress in the endoplasmic reticulum (ER) and overexpression of cyclin D1 in hepatocytes. These mice do not show any evidence of chronic liver injury, but by 2 years of age a majority of the male mice develop hepatocellular neoplasms, including HCC. Unexpectedly, we also found a significant increase in hepatocarcinogenesis independent of necroinflammation in a transgenic line expressing the entire wildtype HBV. As in the mutant HBV mice, HCC was found only in aged--2-year-old--mice of the wildtype HBV line. The karyotype in all the three transgenic lines appears normal and none of the integration sites of the HBV transgene in the mice is near an oncogene or tumor suppressor gene. The significant increase of HCC incidence in all the three transgenic lines--expressing either mutant or wildtype HBV--therefore argues strongly that in absence of chronic necroinflammation, HBV can contribute directly to the development of HCC.