Antagonism of host immune defenses against hepatitis B vims (HBV) infection by the viral proteins is speculated to cause HBV persistence and development of chronic hepatitis. The circulating hepatitis B e antigen (HBeAg, pl7) is known to manipulate host immune responses to assist in the establishment of persistent viral infection, and HBeAg(+) patients respond less effectively to IFN-a therapy compared to HBeAg(-) patients in clinical practice. However, the function(s) of the intracellular form of HBeAg, previously reported as the precore protein intermediate (p22) without the N-terminal signal peptide, remains elusive. Here, we report that the cytosolic p22 protein, but not the secreted HBeAg, significantly reduces interferon stimulated response element (ISRE) activity and expression of interferon stimulated genes (ISGs) upon alpha interferon (IFN-a) stimulation in cell cultures. In line with this, HBeAg(+) patients exhibit weaker induction of ISGs in their livers than HBeAg(-) patients upon IFN-a therapy. Mechanistically, while p22 does not alter the total STAT1 or pSTATl levels in cells treated with IFN-a, it blocks the nuclear translocation of pSTATl by interacting with the nuclear transport factor, karyopherin al, through its C-terminal arginine rich domain. In summary, our study suggests that HBV precore protein, specifically the p22 form, impedes JAK-STAT signaling to help the virus evade host innate immune response and cause resistance to IFN therapy. [ABSTRACT FROM AUTHOR]