Chronic hepatitis B virus (HBV) infection is epidemiologically associated with hepatocellular carcinoma (HCC), but its role in HCC remains poorly understood due to technological limitations. In this study, we systematically characterize HBV in HCC patients. HBV sequences were enriched from 48 HCC patients using an oligo-bead-based strategy, pooled together and sequenced using the FLX-Genome-Sequencer. In the tumors, preferential integration of HBV into promoters of genes (P < 0.001) and significant enrichment of integration into chromosome 10 (P < 0.01) were observed. Integration into chromosome 10 was significantly associated with poorly differentiated tumors (P < 0.05). Notably, in the tumors, recurrent integration into the promoter of the human telomerase reverse transcriptase (TERT) gene was found to correlate with increased TERT expression. The preferred region within the HBV genome involved in integration and viral structural alteration is at the 3-end of hepatitis B virus X protein (HBx), where viral replication/transcription initiates. Upon integration, the 3-end of the HBx is often deleted. HBx–human chimeric transcripts, the most common type of chimeric transcripts, can be expressed as chimeric proteins. Sequence variation resulting in non-conservative amino acid substitutions are commonly observed in HBV genome. This study highlights HBV as highly mutable in HCC patients with preferential regions within the host and virus genome for HBV integration/structural alterations.