The hepatitis B virus (HBV) enhancer II (EII) is highly liver-specific and plays an important role in regulating the transcription of all HBV genes. In this report, mutational analysis on the B1F-binding site in the major functional unit of HBV EII is described. The activity of HBV EII in EII-CAT reporter plasmids was significantly decreased when the sequence of the B1F-binding site in EII was mutated. Furthermore, a single point mutation in the B1 element that aborted the binding of B1F caused a dramatic decrease in viral gene transcription initiated from the HBV core promoter, which resulted in a reduction of the production of the HBV e antigen and pregenomic RNA, the template for viral DNA replication. In conclusion, the interaction of B1F with its target binding sequence in the EII region is crucial for liver-specific transcription and DNA replication of the virus.