Hepatitis delta virus (HDV) contains a circular RNA genome of 1.7 kb. HDV RNA replication is thought to proceed via a rolling-circle mechanism that is dependent on autocatalytic cleavage and ligation reactions. However, it has never been established that these ribozyme activities are indeed involved in HDV RNA replication. To investigate the possible biological significance of HDV RNA self-cleavage, we constructed several HDV dimer cDNAs containing single-base substitutions of the 3' nucleotide of the genomic and the antigenomic self-cleavage sites. These mutations were known to affect self-cleavage in vitro to various extents. The effects of these mutations on HDV RNA replication were examined in hepatic and nonhepatic cell lines. The results showed that all of the mutants which had lost the in vitro self-cleavage activity could not replicate. The only mutant which retained full cleavage activity replicated as efficiently as the wild-type RNA. Thus, this study established that self-cleavage activity is required for HDV RNA replication in cells. Interestingly, the level of HDV RNA detected in cells transfected with this replication-competent mutant and that detected in cells transfected with the wild-type construct were similar in COS-7 cells but vastly different in HepG2 and Huh-7 cells, suggesting that HDV RNA self-cleavage activity may be modulated by cell-specific factors. We also compared the effects of mutations when the primary transcripts of these constructs were of either genomic or antigenomic sense. In constructs which synthesize primary transcripts of genomic sense, all of the antigenomic self-cleavage mutants produced as much hepatitis delta antigen (HDAg) as did the wild-type construct, even in the absence of detectable HDV RNA replication, whereas the genomic self-cleavage mutants produced very little HDAg. These and other data suggest that (i) the primary HDV RNA transcripts of both genomic and antigenomic polarities must first be processed to serve as a template for HDV RNA transcription, (ii) efficient cleavage at the antigenomic self-cleavage site is not required for HDAg expression, and (iii) HDV RNA replication most likely occurs by a double-rolling-circle mechanism.