Co-infection and superinfection of hepatitis B virus (HBV) with hepatitis delta virus (HDV) leads to suppression of HBV replication both in patients and in animal and cellular models. The mechanisms behind this inhibition have not previously been explored fully. HBV replication is governed by four promoters and two enhancers, Enh1 and Enh2. Repression of these enhancers has been reported to be one of the main mechanisms of HBV inhibition. Moreover, in a previous study, it has been demonstrated that alpha interferon (IFN-alpha)-inducible MxA protein inhibits HBV replication. HDV encodes two proteins, p24 and p27. p27 was shown to activate several heterologous promoters, including HBV promoters. In an attempt to analyse the mechanisms of HBV inhibition by HDV, the question was raised whether HDV proteins could act directly by repressing HBV enhancers, and/or indirectly by activating the MxA gene. This issue was addressed in a co-transfection model in Huh-7 cells, using p24- or p27-expressing plasmids along with Enh1, Enh2, HBV and MxA promoter-luciferase constructs. Enh1 and Enh2 were strongly repressed, by 60 and 80 % and 40 and 60 %, by p24 and p27, respectively. In addition, p27 was responsible for threefold activation of the MxA promoter and potentiation of IFN-alpha on this promoter. MxA mRNA quantification and a virus yield reduction assay confirmed these results. In conclusion, this study shows that HDV proteins inhibit HBV replication by trans-repressing its enhancers and by trans-activating the IFN-alpha-inducible MxA gene.