()--2',3'-Dideoxy-3'-thiacytidine (lamivudine [3TC]) is a nucleoside analog which effectively interferes with the replication of hepatitis B virus (HBV) DNA in vitro and in vivo. We have investigated the antiviral properties of 3TC in vitro in HepG2 cells infected with recombinant HBV baculovirus. Different types of information can be obtained with the HBV baculovirus-HepG2 system because (i) experiments can be carried out at various levels of HBV replication including levels significantly higher than those that can be obtained from conventional HBV-expressing cell lines, (ii) cultures can be manipulated and/or treated prior to or during the initiation of HBV expression, and (iii) high levels of HBV replication allow the rapid detection of HBV products including covalently closed circular (CCC) HBV DNA from low numbers of HepG2 cells. The treatment of HBV baculovirus-infected HepG2 cells with 3TC resulted in an inhibition of HBV replication, evidenced by reductions in the levels of both extracellular HBV DNA and intracellular replicative intermediates. The effect of 3TC on HBV replication was both dose and time dependent, and the reductions in extracellular HBV DNA that we observed agreed well with the previously reported efficacy of 3TC in vitro. As expected, levels of HBV transcripts and extracellular hepatitis B surface antigen and e antigen were not affected by 3TC. Importantly, the HBV baculovirus-HepG2 system made it possible to observe for the first time that CCC HBV DNA levels are lower in cells treated with 3TC than in control cells. We also observed that the treatment of HepG2 cells prior to HBV baculovirus infection resulted in a slight increase in the efficacy of 3TC compared to treatments starting 24 h postinfection. The treatment of HepG2 cells with the highest concentration of 3TC tested in this study (2 µM) prior to the initiation of HBV replication markedly inhibited the accumulation of CCC DNA, whereas treatment with the same concentration of 3TC at a time when CCC HBV DNA pools were established within the cells was considerably less effective. In addition, our results suggest that in HepG2 cells, non-protein-associated relaxed circular HBV DNA and particularly CCC HBV DNA are considerably more resistant to 3TC treatment than other forms of HBV DNA, including replicative intermediates and extracellular DNA. We conclude from these studies that the HBV baculovirus-HepG2 system has specific advantages for drug studies and can be used to complement other in vitro model systems currently used for testing antiviral compounds.