We report construction and characterization of tetracycline-controlled hepatitis B virus pX-expressing hepatocyte (AML12) cell lines. These cell lines were constructed in AML12 clonal isolates (clones 3 and 4), which express constitutively the tetracycline-controlled transactivator. Since pX is implicated in HCC, this immortalized hepatocyte model system was used to investigate the mechanism of pX in transformation. Clonal isolates of 3pX and 4pX lineages display conditional synthesis of pX mRNA and protein and a 2-fold increase in growth saturation density following tetracycline removal, implicating pX in monolayer overgrowth. Interestingly, only 3pX clones display pX-dependent anchorage independence. Clone 3 lineages express hepatocyte nuclear factor-1alpha and hepatocyte-specific marker genes; clone 4 lineages express hepatocyte nuclear factor-1beta and reduced levels of hepatocyte-specific marker genes, suggesting the importance of the differentiated hepatocyte in pX-mediated oncogenic transformation. Importantly, 3pX and 4pX lineages display differential expression of immediate early genes c-fos and ATF3. The pX-transforming 3pX lineage displays early, pX-dependent induction of ATF3 and prolonged induction of c-fos. The nontransforming 4pX cells display an absence of pX-dependent ATF3 induction and transient induction of c-fos. Our results support the direct link of pX expression to oncogenic transformation in 3pX lineage clones and underscore the advantage of this conditional cellular model system for studying mechanisms of pX-mediated oncogenesis.