We present evidence for a novel member of the hepadnavirus family that is endemic in wild arctic ground squirrels (Spermophylus parryi kennicotti) in Alaska. This virus, designated arctic squirrel hepatitis virus (ASHV), was initially detected in the livers of animals bearing large hepatic nodules by nucleic acid hybridization with hepadnavirus probes and in plasma by cross-reactivity with antibodies to hepadnavirus surface and core antigens. The complete nucleotide sequence of the 3,302-bp-long ASHV genome was determined and compared with those of ground squirrel hepatitis virus (GSHV) and woodchuck hepatitis virus (WHV); all sequences were organized into four open reading frames, designated pre-C/C, pre-S/S, pol, and X. Despite roughly equivalent variability among the three rodent hepadnaviruses (around 16% base and 19% amino acid exchanges), ASHV appeared to be more closely related to GSHV than to WHV in phylogenetic analysis. Accordingly, preliminary studies of the pathology of ASHV infection suggested that ASHV may be a less efficient oncogenic agent than WHV. About one-third of aged animals maintained in captivity, including virus-infected as well as uninfected squirrels, developed large liver nodules, consisting of hepatocellular adenomas or carcinomas or nonmalignant lesions characterized by drastic microvesicular steatosis. ASHV-infected arctic ground squirrels may serve as a new model with which to analyze the contribution of hepadnavirus- and host-specific determinants to liver pathology and tumorigenesis.