We have found that transcription of the pregenome of an avian hepadnavirus, duck hepatitis B virus (DHBV), is dependent on the presence of a small element in the 5' transcribed region of the pregenome-encoding sequence. This element, which we have named pet (positive effector of transcription), exerts its effect in cis in a position and orientation-dependent manner, suggesting that it may function as part of the nascent pregenome transcript. The requirement for pet depends on the presence in the transcription unit of a region of the DHBV genome located upstream of the envelope promoters, which specifically suppresses transcription of templates lacking pet. In the presence of this region, deletion of pet activates transcription from downstream promoters, suggesting that pregenome transcription complexes fail to reach the downstream promoters. In vitro transcription experiments support the model that pet is required for transcription elongation on the DHBV template. We speculate that pet is required to suppress transcription termination during the first passage of pregenome transcription complexes through a viral termination region on the circular viral DNA.