Hepatitis delta virus (HDV) encodes only one protein, the hepatitis delta antigen (HDAg). Two forms of HDAg, a large (27 kDa) and a small (24 kDa) one, participate in the various steps of HDV replication. To further understand the properties of HDAg, we have constructed recombinant baculoviruses and expressed both forms of the HDAg in insect cells. The gene encoding HDAg was placed under the control of the polyhedrin promoter of Autographa Californica nuclear polyhedrosis virus (AcNPV) by homologous recombination. When Spodoptera frugiperda (Sf9) cells were infected with the recombinant viruses, both the small HDAg and the large HDAg were expressed at high levels. The HDAgs produced by the recombinants were similar in size and antigenic properties to those of the proteins produced in mammalian hepatoma cell lines. It was also localized exclusively in the nuclei. In addition, both proteins bound to HDV RNA in an in vitro assay. No difference in the RNA-binding affinity was noted between the two forms of HDAg, suggesting that the trans-dominant inhibitory activity of the large HDAg on HDV replication is not due to its competition with the small HDAg for RNA binding. Two RNA-protein complexes could be detected, suggesting either that there are at least two binding sites on the HDV RNA or that HDAg binds to HDV RNA in two multimeric forms. We have further shown that both the large and the small HDAgs are phosphoproteins, with the former having an approximately sixfold higher level of phosphorylation. Finally, it was demonstrated that the large HDAg was isoprenylated, while the small one was not. These differences in post-translational modifications are the first differences in biochemical properties demonstrated between the two forms and may explain the differential effects of the large and small HDAgs on HDV RNA replication and virus packaging.