The mechanism of action of hepatitis B virus (HBV) X protein in transcriptional transactivation and in tumorigenesis remains obscure. We have used the yeast two-hybrid system to identify a cellular protein that can interact with HBV X protein. This protein, designated X-associated protein 1 (XAP-1), is a human homolog of the UV-damaged DNA-binding protein (UV-DDB) recovered from a monkey cell cDNA library. UV-DDB is presumed to be involved in DNA repair. The interaction between X protein and XAP-1 protein was verified by immunoprecipitation of yeast cell lysates expressing both proteins and by in vitro mixing with X protein expressed as a glutathione S-transferase fusion protein and XAP-1 protein either in HeLa cell extracts or synthesized by in vitro translation. We speculate that the interaction of X protein with a DNA repair protein may recruit cellular proteins to repair the partially double-stranded HBV genome or may modify cellular transcription processes. An effect on the cellular DNA repair system may explain a cofactor role for HBV in liver cancer development.