The host-mediated RNAi pathways restrict replication of viruses in plant, invertebrate and vertebrate systems. However, comparatively little is known about the interplay between RNAi and various viral infections in mammalian hosts. We show in the present study that the siRNA-mediated silencing of Drosha, Dicer and Ago2 [argonaute RISC (RNA-induced silencing complex) catalytic component 2] transcripts in Huh7 cells resulted in elevated levels of HBV (hepatitis B virus)-specific RNAs and, conversely, we observed a decrease in mRNA and protein levels of same RNAi components in HepG2 cells infected with HBV. Similar reductions were also detectable in CHB (chronic hepatitis B) patients. Analysis of CHB liver biopsy samples, with high serum HBV DNA load (>log108 IU/ml), revealed a reduced mRNA and protein levels of Drosha, Dicer and Ago2. The low expression levels of key RNAi pathway components in CHB patient samples as well as hepatic cells established a link between HBV replication and RNAi components. The HBV proteins were also examined for RSS (RNA-silencing suppressor) properties. Using GFP-based reversion of silencing assays, in the present study we found that HBx is an RSS protein. Through a series of deletions and substitution mutants, we found that the full-length HBx protein is required for optimum RSS activity. The in vitro dicing assays revealed that the HBx protein inhibited the human Dicer-mediated processing of dsRNAs into siRNAs. Together, our results suggest that the HBx protein might function as RSS to manipulate host RNAi defence, in particular by abrogating the function of Dicer. The present study may have implications in the development of newer strategies to combat HBV infection.