Particles purified from the liver of hepatitis B virus-infected patients were previously shown by us to incorporate ³²P-deoxynucleotides into viral DNA and DNA-RNA hybrid molecules when incubated in a DNA polymerase reaction mixture. In this investigation, similar particles from duck and ground squirrel livers infected with viruses closely related to HBV were also shown to incorporate ³²P-deoxynucleotides into viral-specific DNA and DNA-RNA hybrid molecules when incubated in vitro in a DNA polymerase reaction mixture. The particles from duck hepatitis B virus-infected liver contained a heterogeneous population of hybrid molecules, while those from ground squirrel hepatitis virus-infected liver contained hybrid molecules with densities similar to those found in HBV particles including a distinct population of molecules with an average density of 1.57 g/cm³. Brief endogenous DNA polymerase reactions with particles from all three livers, resulted in incorporation of ³²P-deoxynucleotides into viral DNA of DNA-RNA hybrid as well as viral DNA molecules. When the reaction was continued in the presence of a 1000-fold molar excess of unlabeled deoxynucleotides, a decrease in [³²P]DNA in the DNA-RNA hybrid region of the Cs₂SO₄ density gradient and a proportional increase in [³²P]DNA in the DNA region of the gradient was observed. This effect was seen most dramatically with particles isolated from freshly obtained ground squirrel hepatitis virus-infected livers in which 90% of the pulse labeled DNA in the hybrid species at the buoyant density of 1.57 g/cm³ appeared to be converted to a form with the buoyant density of pure DNA (1.42 g/cm³). Storage of virus particles at 4°, or prior freezing of infected ground squirrel liver almost completely abolished the ability of the endogenous DNA polymerase activity to incorporate ³²P-deoxynucleotides into hybrid molecules, while incorporation into DNA molecules was apparently unaffected. These results suggest that different enzymatic activities catalyze synthesis of the viral DNA in DNA-RNA hybrids and in molecules with buoyant density of pure DNA. Thus particles from infected liver synthesize DNA of DNA-RNA hybrid molecules which can be converted in the particles into molecules with the buoyant density of pure DNA. This indicates that DNA-RNA hybrids may be intermediates in viral DNA replication and that the mechanism of hepatitis B virus (and closely related viruses of ground squirrels and ducks) DNA replication differs from that known for other DNA viruses.