The covalently closed circular DNA (cccDNA) of the hepatitis B virus (HBV) plays an essential role in chronic hepatitis. The cellular repair system is proposed to convert cytoplasmic nucleocapsid (NC) DNA (partially double-stranded DNA) into cccDNA in the nucleus. Recently, antiviral cytidine deaminases, AID/APOBEC proteins, were shown to generate uracil residues in the NC-DNA through deamination, resulting in cytidine-to-uracil (C-to-U) hypermutation of the viral genome. We investigated whether uracil residues in hepadnavirus DNA were excised by uracil-DNA glycosylase (UNG), a host factor for base excision repair (BER). When UNG activity was inhibited by the expression of the UNG inhibitory protein (UGI), hypermutation of NC-DNA induced by either APOBEC3G or interferon treatment was enhanced in a human hepatocyte cell line. To assess the effect of UNG on the cccDNA viral intermediate, we used the duck HBV (DHBV) replication model. Sequence analyses of DHBV DNAs showed that cccDNA accumulated G-to-A or C-to-T mutations in APOBEC3G-expressing cells, and this was extensively enhanced by UNG inhibition. The cccDNA hypermutation generated many premature stop codons in the P gene. UNG inhibition also enhanced the APOBEC3G-mediated suppression of viral replication, including reduction of NC-DNA, pre-C mRNA, and secreted viral particle-associated DNA in prolonged culture. Enhancement of APOBEC3G-mediated suppression by UNG inhibition was not observed when the catalytic site of APOBEC3G was mutated. Transfection experiments of recloned cccDNAs revealed that the combination of UNG inhibition and APOBEC3G expression reduced the replication ability of cccDNA. Taken together, these data indicate that UNG excises uracil residues from the viral genome during or after cccDNA formation in the nucleus and imply that BER pathway activities decrease the antiviral effect of APOBEC3-mediated hypermutation.