Although an overall genetic strategy for hepadnaviral reverse transcription has been established, the mechanism that underlies the minus-strand transfer is still poorly defined. We and others independently identified a novel cis-acting element, termed beta or varphi, respectively, that is critical for the minus-strand DNA synthesis of hepatitis B virus. A 5'-3', long-range interaction of the RNA template was proposed that involves the 5' epsilon sequence (encapsidation signal) and the 3' beta/varphi sequence. We subjected the hypothesized base pairing to genetic analysis. The data indicated that mutations abrogating the hypothesized base pairing markedly impaired minus-strand DNA synthesis, while compensatory mutations that restored the base pairing rescued the minus-strand DNA synthesis. These results demonstrated the critical role of the 5'-3', long-range interaction in minus-strand DNA synthesis. We speculate that such a long-range interaction may precisely juxtapose a donor to an acceptor during minus-strand transfer.