To explore functional domains in the hepatitis B virus (HBV) polymerase, two naturally occurring HBV isolates (56 and 2-18) with 98.7% nucleic acid sequence homology but different replication efficiencies were studied. After transfection into HepG2 cells, HBV DNA isolated from intracellular virus core particles was much higher in 56-transfected cells than in cells transfected with 2-18. The structural basis for the difference in replication efficiency between these two isolates was studied by functional domain gene substitution. The complete polymerase (P) gene and its gene segments coding for the terminal protein (TP), spacer (SP), reverse transcriptase (RT), and RNase H in 2-18 were separately replaced with their counterparts from 56 to construct full-length chimeric genomes. Cell transfection analysis revealed that substitution of the complete P gene of 2-18 with the P gene from 56 slightly enhanced viral replication. The only chimeric genome that regained the high replication efficiency of the original 56 isolate was the one with substitution of the RT gene of 2-18 with that from 56. Within the RT region, amino acid differences between isolates 2-18 and 56 were located at positions 617 (methionine versus leucine), 652 (serine versus proline), and 682 (valine versus leucine). Point mutation identified amino acid 652 as being responsible for the difference in replication efficiency. Homologous modeling studies of the HBV RT domain suggest that the mutation of residue 652 from proline to serine might affect the conformation of HBV RT which interacts with the template-primer, leading to impaired polymerase activity.