In an attempt to establish a model of the healthy carrier state in hepatitis B virus (HBV) infections, transgenic mice expressing HBV genes were produced. Fertilized one-cell eggs were microinjected with subgenomic fragments of HBV DNA containing the coding regions for the HBV surface antigen (HBsAg) and pre-S and X antigens. Either the normal (HBV) or metallothionein promoters were used to obtain expression of the HBV genes. There was no evidence of viral replication or tissue pathology. The integrated HBV DNA sequences were inherited in a normal Mendelian fashion. Three of 16 transgenic mice expressed HBV-encoded gene products to which they were immunologically tolerant. Expression was not tissue specific and may be influenced by the genomic integration site and cellular factors. Both HBsAg and pre-S antigen were detectable within the cytoplasm of hepatocytes and renal tubular epithelial cells. High serum concentrations of HBsAg were detectable and the secreted product appeared authentic as judged by mean density, morphology, mean particle diameter, polypeptide composition, and antigenicity. The absence of tissue pathology in these immunologically tolerant animals supports the hypothesis that cellular injury under these conditions is not a direct consequence of expression of the pre-S or HBs regions of the HBV genome.