Hepatitis B virus core antigen gene expresses two coca rboxy-terminal proteins, termed precore and core proteins. Both precore and core proteins can form nucleocapsid-like particles. In order to understand the mechanism that leads to the formation of the nucleocapsid, we have expressed precore and core protein sequences in COS cells, a monkey kidney cell line, and compared the properties of these two particles. Our results show that core protein can form particles with various densities and they are present mostly in the cytosol. Precore protein, on the other hand, forms particles with one predominant density, and a majority of these particles are present in the lumen of the endoplasmic reticulum (ER). Furthermore, our results show that, when coexpressed in the same cells, core protein and the ER-associated surface antigens (envelope protein) show colocalization, indicating interaction between these two viral structural proteins. © 1990.