The hepatitis B virus (HBV) surface antigen (HBsAG) is encoded by the S gene under the regulation of a promoter in the pre-S1 region. The S gene promoter does not contain a 'TATA' box-like sequence, but there is a sequence resembling, in part, the late promoter of Simian virus 40 (SV40). In an attempt to study the regulation of the S gene promoter we looked for cellular proteins which bind to this region. We report here that a nuclear protein is tightly bound to the HBV genome at a position approximately 190 bases upstream from the S gene promoter. Evidence is provided to show that (a) this nuclear protein is the nuclear factor I (NF-I) that was previously found to be bound to the inverted terminal repeat of the adenovirus (Ad) DNA and to enhance Ad DNA replication in vitro and (b) this NF-I binding site is required for optimal activity of the S gene promoter.