In pursuit of novel therapeutics targeting the hepatitis B virus (HBV) infection, we evaluated a dihydroquinolizinone compound (DHQ-1) that in the nanomolar range reduced the production of virion and surface protein (HBsAg) in tissue culture. This compound also showed broad HBV genotype coverage, but was inactive against a panel of DNA and RNA viruses of other species. Oral administration of DHQ-1 in the AAV-HBV mouse model resulted in a significant reduction of serum HBsAg as soon as 4 days following the commencement of treatment. Reduction of HBV markers in both in vitro and in vivo experiments was related to the reduced amount of viral RNA including pre-genomic RNA (pgRNA) and 2.4/2.1 kb HBsAg mRNA. Nuclear run-on and subcellular fractionation experiments indicated that DHQ-1 mediated HBV RNA reduction was the result of accelerated viral RNA degradation in the nucleus, rather than the consequence of inhibition of transcription initiation. Through mutagenesis of HBsAg gene sequences, we found induction of HBsAg mRNA decay by DHQ-1 required the presence of the HBV posttranscriptional regulatory element (HPRE), with a 109 nucleotides sequence within the central region of the HPRE alpha sub-element being the most critical. Taken together, the current study shows that a small molecule can reduce the overall levels of HBV RNA, especially the HBsAg mRNA, and viral surface proteins. This may shed light on the development of a new class of HBV therapeutics.