Chronic infection with hepatitis B virus (HBV) is associated with development of hepatocellular carcinoma (HCC). The exact mechanism by which chronic infection with HBV contributes to onset of HCC is unknown. However, previous studies have implicated the HBV transactivator protein, HBx, in progression of HCC through its ability to bind the human tumor suppressor protein, p53. In this study, we have examined the ability of HBx to modify p53 regulation of the HCC tumor marker gene, alpha-fetoprotein (AFP). By utilizing in vitro chromatin assembly of DNA templates prior to transcription analysis, we have demonstrated that HBx functionally disrupts p53-mediated repression of AFP transcription through protein-protein interaction. HBx modification of p53 gene regulation is both tissue-specific and dependent upon the p53 binding element. Our data suggest that the mechanism by which HBx alleviates p53 repression of AFP transcription is through an association with DNA-bound p53, resulting in a loss of p53 interaction with liver-specific transcriptional co-repressors.