The smallest open reading frame of hepatitis B virus (HBV) has been designated the X gene and its biological function during HBV infection and replication is not known. Experiments described here demonstrate that expression of the HBV X gene in HepG2 cells containing a plasmid with the chloramphenicol acetyltransferase (CAT) gene under control of the human immunodeficiency virus (HIV-1) long terminal repeat (LTR) sequence leads to a marked increase in CAT gene transcription as well as expression of the gene product (CAT). The HIV-1 tatIII gene and the HBV X gene together increased HIV-1 LTR-regulated CAT expression above that observed with either gene alone, suggesting a synergistic effect of the X gene and tat. HBV X gene also stimulated expression of the CAT gene under control of the simian virus 40 enhancer and early promoter but not the visna virus LTR or the human T-cell lymphotropic virus type I (HTLV-I) LTR, indicating that the HBV X gene can transactivate some but not other heterologous viral sequences. Transactivation of the HIV-1 LTR by the HBV X gene varied in different cell lines, suggesting that it may be mediated by a cellular factor(s).