Currently, standard treatments for chronic hepatitis B such as nucleos(t)ide analogs (NAs), effectively reduce hepatitis B virus (HBV) loads but rarely result in a functional cure (defined as sustained HBsAg loss). We report the discovery of a novel, 4-pyridone compound, SAG-524, a potent and orally bioavailable small molecule inhibitor of HBV replication. The antiviral characteristics and selectivity of SAG-524 and its derivative compound against HBV were evaluated in HBV-infection assays and HBV-infected chimeric urokinase-type plasminogen activator/severe combined immunodeficiency mice with humanized livers (PXB mice), alone or in combination with entecavir. Toxicity studies were conducted in mice and monkeys. SAG-524 reduced HBV-DNA (IC50 = 0.92nM) and HBsAg (IC50 = 1.4nM) in the supernatant of the HepG2.2.15 cells. SAG-524 selectively destabilized HBV-RNA via PAPD5, but not GAPDH or albumin mRNA, by shortening the poly(A) tail. PAPD5 may also be involved in HBV regulation via ELAVL1. In a study of HBV-infected PXB mice, SAG-524 produced potent reductions of serum HBsAg and HBcrAg, and the minimum effective dose was estimated to be 6mg/kg/day. The combination therapy with entecavir greatly reduced HBsAg and cccDNA in the liver due to reduction of human hepatocytes with good tolerability. Administration of SAG-524 to monkeys, up to 1000mg/kg/day for two weeks, led to no significant toxicity, as determined by blood tests and pathological images. We have identified SAG-524 as novel and orally bioavailable HBV-RNA destabilizers which can reduce HBsAg and HBV-DNA levels, and possibly contribute a functional cure.