Recently hepatitis B virus genotype C (HBV/C) has been classified into geographically typical two subtypes (subgenotypes); HBV/C1 in Southeast Asia (Cs) and HBV/C2 in East Asia (Ce). Our aim is to develop a rapid subtyping assay and to examine the virological features of these two subtypes. Based on 171 HBV/C strains retrieved from the database, 17 single nucleotides polymorphisms (SNPs) were found between two subtypes. Taking advantage of five SNPs in non-overlapping polymerase region, a restriction fragment length polymporphism method with three endonucleases was newly developed for distinguishing between HBV/Cs and HBV/Ce. The method was applied to 49 HBV/C carriers from Japan and Hong Kong. The 24 in Hong Kong were classified into HBV/Cs, and the 25 in Japan were HBV/Ce, confirmed by sequencing. Some specific mutations were detected in the encapsidation signal; precore stop mutation (A1896), accompanied by a C-to-T substitution at nt 1858, was found in HBV/Ce strains, and another precore mutation (A1898), accompanied by a C-to-T mutation at nt 1856, was found in HBV/Cs. Especially, two closely linked mutations (A1896 and A1899) in HBV/Ce could stabilize the epsilon loop structure more efficiently and influece viral replication. Hence, these virological differences between the two subtypes might influence clinical features.