With about 350 million people chronically infected around the world hepatitis B is a major health problem. Template for progeny HBV synthesis is the viral genome, organized as a minichromosome (cccDNA) inside the hepatocyte nucleus. How viral cccDNA gene expression is regulated by its chromatin structure; more importantly, how the modulation of this structure impacts on viral gene expression remains elusive. Here, we found that the enzyme SetDB1 contributes to setting up a repressed cccDNA chromatin state. This repressive state is activated by the histone lysine demethylase-1 (LSD1). Consistently, inhibiting or reducing LSD1 levels led to repression of viral gene expression. This correlates with the transcriptionally repressive mark H3K9 methylation and reduction on the activating marks H3 acetylation and H3K4 methylation on viral promoters. Investigating the importance of viral proteins we found that LSD1 recruitment to viral promoters was dependent on the viral transactivator protein HBx. Moreover, the histone methyltransferase Set1A and HBx are simultaneously bound to the core promoter, and Set1A expression correlates with cccDNA H3K4 methylation. Our results shed light on the mechanisms of HBV regulation mediated by the cccDNA chromatin structure, offering new therapeutic targets to develop drugs for the treatment of chronically infected HBV patients.