Selective encapsidation of hepatitis B virus (HBV) genomic RNA within cytoplasmic core particles requires recognition of the cis-encapsidation signal, (termed epsilon) located at the 5' end of genomic RNA. By transfecting plasmids expressing chimeric RNAs bearing HBV sequences fused to lacZ, we have mapped the minimal region of epsilon to the 5' 94 nucleotides (nt) of genomic RNA. Enzymatic probing of the RNA secondary structure in this region (by using either in vitro transcripts or RNA extracted from HBV core particles) reveals a stem-loop structure containing a lower stem, a 6-nt bulge, an upper stem with a single unpaired U residue, and a 6-nt loop. The functional role of this structure in encapsidation was explored by examining the effects of mutations in epsilon on encapsidation of RNA in vivo. These studies reveal that (i) in the lower stem, base pairing but not specific primary sequence is required for function; (ii) there is no requirement for base pairing in the lower portion of the upper stem, but base pairing elsewhere in this stem contributes to packaging efficiency; (iii) the presence of the 6-nt bulge, but not its primary sequence, is important for function; and (iv) specific nucleotide sequences in the loop and in regions of the upper stem are critical for RNA encapsidation.