The mechanisms by which hepatitis B virus (HBV) establishes and maintains chronic hepatitis B infection (CHB) are poorly defined. Innate immune responses play a critical role in reducing HBV replication and pathogenesis. HBV has developed numerous mechanisms to escape these responses including the production of the secreted hepatitis B e antigen (HBeAg), which has been shown to regulate the antiviral toll like receptor (TLR) and interleukin 1 (IL-1) signalling. IL-18 is a related cytokine that inhibits HBV replication in hepatoma cell lines and the liver via induction of interferon gamma (IFN-γ) in NK cells and T cells. We hypothesized that HBV, or HBV proteins modulate NK cell IFN-γ expression as an accessory immunomodulatory function. We show that HBeAg protein, down-regulates NK cell IFN-γ expression. Additionally IFN-γ expression was significantly inhibited by exposure to serum from individuals with HBeAg-positive, but not HBeAg-negative chronic HBV infection. We also show that the HBeAg protein suppresses IL-18 mediated NF- kB signalling in hepatoma cells whereas the related HBV core protein did not. Together these findings show that the HBeAg is an important regulator of IL-18 signalling and IFN-γ expression, which may be important in establishment and/or maintenance of persistent HBV infection.