Background A protective immune response against Hepatitis B infection can be obtained through the administration of a single viral polypeptide, the Hepatitis B surface antigen (HBsAg). Thus, the Hepatitis B vaccine is generated through the utilization of recombinant DNA technology, preferentially by using yeast-based expression systems. However, the polypeptide needs to assemble into spherical particles, so-called virus-like particles (VLPs), to elicit the required protective immune response. So far, no clear evidence has been presented showing whether HBsAg assembles in vivo inside the yeast cell into VLPs or later in vitro during down-stream processing and purification. Results High level production of HBsAg was carried out with recombinant Pichia pastoris using the methanol inducible AOX1 expression system. The recombinant vaccine was isolated in form of VLPs after several down-stream steps from detergent-treated cell lysates. Search for the intracellular localization of the antigen using electron microscopic studies in combination with immunogold labeling revealed the presence of HBsAg in an extended endoplasmic reticulum where it was found to assemble into defined multi-layered, lamellar structures. The distance between two layers was determined as ~6 nm indicating that these lamellas represent monolayers of well-ordered HBsAg subunits. We did not find any evidence for the presence of VLPs within the endoplasmic reticulum or other parts of the yeast cell. Conclusions It is concluded that high level production and intrinsic slow HBsAg VLP assembly kinetics are leading to retention and accumulation of the antigen in the endoplasmic reticulum where it assembles at least partly into defined lamellar structures. Further transport of HBsAg to the Golgi apparatus is impaired thus leading to secretory pathway disfunction and the formation of an extended endoplasmic reticulum which bulges into irregular cloud-shaped formations. As VLPs were not found within the cells it is concluded that the VLP assembly process must take place during down-stream processing after detergent-mediated disassembly of HBsAg lamellas and subsequent reassembly of HBsAg into spherical VLPs.