Despite current molecular evidence suggesting that hepatitis B virus (HBV) X protein (HBx) plays an important role during HBV-mediated hepatocarcinogenesis, the detailed mechanism is still controversial. Here, it was shown that HBx overcomes cellular senescence provoked by all-trans retinoic acid (ATRA) in HepG2 cells, as demonstrated by the impaired induction of irreversible G(1) arrest and senescence-associated β-galactosidase activity by ATRA in the presence of HBx. The anti-senescence effect of HBx was also observed in another human hepatoma cell line, Hep3B, but not in Huh-7 cells in which the p16 and p21 proteins are absent. In addition, HBx suppressed ATRA-mediated induction of p16 and p21 in HepG2 cells via promoter hypermethylation, resulting in inactivation of retinoblastoma protein. Furthermore, the ability of HBx to overcome ATRA-induced cellular senescence almost completely disappeared when the levels of p16 and p21 in the HBx-expressing cells became similar to those in the control cells by complementation in the former by exogenous expression, knockdown of their expression in the latter using specific small interfering RNA or treatment with a DNA methylation inhibitor, 5-Aza-2'-deoxycytidine. These results suggest that HBx executes its potential by downregulating levels of p16 and p21 via DNA methylation. As cellular senescence is a tumour-suppression process, the present study provides a new strategy by which HBV promotes hepatocarcinogenesis.