Background:. C-terminal truncated hepatitis B virus (HBV) surface protein has been reported to be associated with transcription activation activities. However, the studies on their roles in hepatocarcinogenesis remained limited. Material and Methods: From 1999 to 2002, we analyzed 300 HBV-related resected HCC specimens in Chang-Gung Memorial Hospital by immunohistochemistry and identified 28 hepatocellular carcinoma (HCC) tissues which were positive for hepatitis B core antigen (HBcAg) expression in the cancerous parts. Of them, 25 cases had frozen tumor tissues available for further studies. Freely replicative forms of HBV genomes were identified and isolated from the HBcAg-positive HCC tissues for sequence analysis. Plasmids encoding three HBV S truncation mutants were constructed to investigate their oncogenic potentials in NIH/3T3 cells. Tumorigenicity of these HBV S truncation mutants was evaluated by use of xenograft experiments in nude mice. The clinicopathological features of the patients carrying the mutants were compared with 25 sex- and age-matched HBcAg-negative HCC patients. Result: The 25 patients with HBcAg-positive HCC tissues included 20 males and 5 females. All patients had cirrhosis. Southern blot analysis for HBV-DNA in 16 tumors with sufficient tissue samples confirmed that active replicative forms of HBV genomes were present in these HCC tumors. Clinical data analysis suggested that most of the viable free HBV genomes were identified in early stage HCCs. Three deletions, and 3 nonsense mutations (sL95*, sW182* and sL216*) of the S gene were identified in 5 cancerous tissues and 3 non-cancerous issues, resulting in C-terminal truncations of the HBV surface proteins. Only the sW182* mutant was identified in 2 cancerous and 1 paired non-cancerous tissues, while other mutations were identified in one specimen only. Additional HBV-DNA sequence analysis in 56 HBV-related, HBcAg-negative HCC tumors was performed, which identified 7 tumors carrying the sW182* mutation, suggesting that the sW182* could be a frequently occurring HBV mutation in HCC. Functional studies of the 3 HBV S nonsense mutants revealed their transcription activation and transformation activities. Tumorigenicity analysis by xenograft experiments in nude mice showed that the sW182* mutant was the most potent oncogenic surface protein among the three mutants. Conclusion: The HBV S truncation mutants may play an important role in HBV-related hepatocarcinogenesis.