The core promoter of hepatitis B virus (HBV) genome is a critical region for transcriptional initiation of 3.5 kb, pregenome and precore RNAs and for the viral replication. Although a number of host-cell factors that potentially regulate the viral promoter activities have been identified, the molecular mechanisms of the viral gene expression, in particular, regulatory mechanisms of the transcriptional repression remain elusive. In this study, we identified LUC7 like 3 pre-mRNA splicing factor (LUC7L3, also known as hLuc7A or CROP) as a novel interacting partner of HBV enhancer II and basal core promoter (ENII/BCP), key elements within the core promoter, through the proteomic screening and found that LUC7L3 functions as a negative regulator of ENII/BCP. Gene silencing of LUC7L3 significantly increased expression of the viral genes and antigens as well as the activities of ENII/BCP and core promoter. In contrast, overexpression of LUC7L3 inhibited their activities and HBV replication. In addition, LUC7L3 possibly contributes to promotion of the splicing of 3.5 kb RNA, which may also be involved in negative regulation of the pregenome RNA level. This is the first to demonstrate the involvement of LUC7L3 in regulation of gene transcription and in viral replication.