Several studies have demonstrated that cytokine-mediated noncytopathic suppression of hepatitis B virus (HBV) replication may provide an alternative therapeutic strategy for the treatment of chronic hepatitis B infection. In our previous study, we showed that transforming growth factor-beta1 (TGF-β1) could effectively suppress HBV replication at physiological concentrations. Here, we provide more evidence that TGF-β1 specifically diminishes HBV core promoter activity, which subsequently results in a reduction in the level of viral pregenomic RNA (pgRNA), core protein (HBc), nucleocapsid, and consequently suppresses HBV replication. The hepatocyte nuclear factor 4alpha (HNF-4α) binding element(s) within the HBV core promoter region was characterized to be responsive for the inhibitory effect of TGF-β1 on HBV regulation. Furthermore, we found that TGF-β1 treatment significantly repressed HNF-4α expression at both mRNA and protein levels. We demonstrated that RNAi-mediated depletion of HNF-4α was sufficient to reduce HBc synthesis as TGF-β1 did. Prevention of HNF-4α degradation by treating with proteasome inhibitor MG132 also prevented the inhibitory effect of TGF-β1. Finally, we confirmed that HBV replication could be rescued by ectopic expression of HNF-4α in TGF-β1-treated cells. Our data clarify the mechanism by which TGF-β1 suppresses HBV replication, primarily through modulating the expression of HNF-4α gene.