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Viral mutations have been implicated in alteration of the biological phenotype of hepatitis B virus (HBV). We recently cloned and sequenced the viral genome of an HBV strain associated with an outbreak of fulminant hepatitis (FH strain). The FH strain contained numerous mutations in all genomic regions and was functionally characterized by a more efficient encapsidation of pregenomic RNA leading to highly enhanced replication. To define the responsible mutation(s) for the enhanced replication, we introduced individual mutations of the FH strain into a wild-type construct by oligonucleotide-directed mutagenesis. Analysis of viral replication showed that two adjacent mutations in the HBV core promotor (C to T at nucleotide 1768 and T to A at nucleotide 1770) led to high level replication. Similar to the FH strain, this mutant displayed the phenotype of enhanced encapsidation of pregenomic RNA. Functional studies in an encapsidation assay demonstrated that the identified mutations resulted in a minor increase of pregenomic RNA transcription (two- to threefold) and a major transcription-independent enhancement (> 10-fold) of viral encapsidation. Our results demonstrate that the two adjacent mutations in the HBV core promotor region are responsible for the enhanced replication of the FH strain. These two mutations, outside the previously described encapsidation signal, core, and polymerase polypeptides, appeared to affect a novel genetic element involved in viral encapsidation.