Hepatitis delta virus (HDV) contains a circular RNA which encodes a single protein, hepatitis delta antigen (HDAg). HDAg exists in two forms, a small form (S-HDAg) and a large form (L-HDAg). S-HDAg can transactivate HDV RNA replication. Recent studies have shown that posttranslational modifications, such as phosphorylation and acetylation, of S-HDAg can modulate HDV RNA replication. Here we show that S-HDAg can be methylated by protein arginine methyltransferase (PRMT1) in vitro and in vivo. The major methylation site is at arginine-13 (R13), which is in the RGGR motif of an RNA-binding domain. The methylation of S-HDAg is essential for HDV RNA replication, especially for replication of the antigenomic RNA strand to form the genomic RNA strand. An R13A mutation in S-HDAg inhibited HDV RNA replication. The presence of a methylation inhibitor, S-adenosyl-homocysteine, also inhibited HDV RNA replication. We further found that the methylation of S-HDAg affected its subcellular localization. Methylation-defective HDAg lost the ability to form a speckled structure in the nucleus and also permeated into the cytoplasm. These results thus revealed a novel posttranslational modification of HDAg and indicated its importance for HDV RNA replication. This and other results further showed that, unlike replication of the HDV genomic RNA strand, replication of the antigenomic RNA strand requires multiple types of posttranslational modification, including the phosphorylation and methylation of HDAg.Hepatitis delta virus (HDV) is a satellite virus and requires the presence of hepatitis B virus (HBV) for virus assembly and production (42). Its genome is a single-stranded, circular RNA of 1.7 kb. Unlike other satellite viruses, HDV can replicate independently of its helper virus, HBV, and does not share sequence homology with HBV. The virus contains a single protein species, hepatitis delta antigen (HDAg), which exists in two forms, including a small form of 195 amino acids (SHDAg) and a large form of 214 amino acids (L-HDAg) (16). HDV RNA replication occurs in the nucleus via host RNA polymerases (11,30,33). The viral genomic RNA replicates by a rolling-circle mechanism into a full-length antigenomic RNA and also transcribes an antigenomic-strand mRNA (0.8 kb) which contains the HDAg open reading frame (ORF). The full-length antigenomic RNA, in turn, is replicated into the genomic-strand RNA by another round of rolling-circle replication. The replication of genomic and antigenomic RNAs and transcription of the HDAg-encoding mRNA are carried out by independent mechanisms, probably by different polymerases (30,31,33). The 0.8-kb mRNA is translated into S-HDAg, which is required for continuous HDV RNA replication (21). In the later stages of viral replication, an RNA editing event occurs at the amber termination codon of the S-HDAg ORF to allow the synthesis of L-HDAg (40, 41), which is required for virus assembly (2, 24). L-HDAg was also thought to inhibit HDV RNA replication when expressed artificially early in viral replication (4...