During hepatitis B virus (HBV) infection, distinct host-virus interactions may establish the patterns of viral clearance and persistence and the extent of virus-associated pathology. It is generally thought that HBV-specific class I-restricted cytotoxic T lymphocytes (CTLs) play a critical role in this process by destroying infected hepatocytes. This cytopathic mechanism, however, could be lethal if most of the hepatocytes are infected. In the current study, we demonstrate that class I-restricted HBV-specific CTLs profoundly suppress hepatocellular HBV gene expression in HBV transgenic mice by a noncytolytic process, the strength of which greatly exceeds the cytopathic effect of the CTLs in magnitude and duration. We also show that the regulatory effect of the CTLs is initially mediated by interferon gamma and tumor necrosis factor alpha, is delayed in onset, and becomes independent of these cytokines shortly after it begins. The data indicate that the anti-viral CTL response activates a complex regulatory cascade that inhibits hepatocellular HBV gene expression without killing the cell. The extent to which this mechanism contributes to viral clearance or viral persistence during HBV infection remains to be determined.