Ducks congenitally infected with duck hepatitis B virus (HBV) were treated with the antiviral guanine nucleoside analog penciclovir for 4 weeks at a dose of 10 mg/kg of body weight per day. The effects of treatment on viremia and intrahepatic viral genome replication, transcription, and translation were examined. In seven of eight penciclovir-treated ducks, viremia was barely detectable after a week of treatment. After 4 weeks of treatment, molecular hybridization studies showed that intrahepatic viral DNA, RNA, and protein levels were significantly reduced compared with those in placebo-treated controls. Synthesis of all viral replicative intermediates, including the normally persistent viral supercoiled DNA species, was inhibited by penciclovir treatment. Examination of liver tissue sections after in situ DNA hybridization or immunohistochemical staining confirmed that viral DNA and protein synthesis had been profoundly inhibited in most hepatic parenchymal cells. However, small subpopulations of cells, in particular the small bile duct epithelial cells, remained strongly positive for duck HBV antigens and DNA despite treatment. There was no evidence of toxicity associated with penciclovir therapy. This study confirms the safety and potent antihepadnaviral activity of penciclovir in vivo but indicates that further improvements in antiviral therapy will be required to completely eliminate HBV infection.