Assembly of replication-competent hepatitis B virus (HBV) nucleocapsids requires the interaction of the core protein, the P protein, and the RNA pregenome. The core protein contains an arginine-rich C-terminal domain which is dispensable for particle formation in heterologous expression systems. Using transient expression in HuH7 cells of a series of C-terminally truncated core proteins, I examined the functional role of this basic region in the context of a complete HBV genome. All variants containing at least the 144 N-terminal amino acids were assembly competent, but efficient pregenome encapsidation was observed only with variants consisting of 164 or more amino acids. These data indicate that one function of the arginine-rich region is to provide the interactions between core protein and RNA pregenome. However, in cores from the variant ending with amino acid 164, the production of complete positive-strand DNA was drastically reduced. Moreover, almost all positive-strand DNA originated from in situ priming, whereas in wild-type particles, this type of priming not supporting the formation of relaxed circular DNA (RC-DNA) accounted for about one half of the positive strands. Further C-terminal residues to position 173 restored RC-DNA formation, and the corresponding variant did not differ from the full-length core protein in all assays used. The observation that RNA encapsidation and formation of RC-DNA can be genetically separated suggests that the core protein, via its basic C-terminal region, also acts as an essential auxiliary component in HBV replication, possibly like a histone, or like a single-stranded-DNA-binding protein. In contrast to their importance for HBV replication, sequences beyond amino acid 164 were not required for the formation of enveloped virions. Since particles from variant 164 did not contain mature DNA genomes, a genome maturation signal is apparently not required for HBV nucleocapsid envelopment.