BACKGROUND & AIMS: Deletion of 15-21 nucleotides covering the preS1 start codon frequently occurs in patients with chronic HBV (CHB) with HBV genotype C and has been reported to be related to progression to hepatocellular carcinoma (HCC). However, the underlying mechanism causing the distinct phenotype of this HBV variant remains largely unknown. We investigated the mechanism by which preS1Del is related to liver disease progression and enhanced HBV replication, focusing on endoplasmic reticulum (ER) stress. METHODS: The effects of HBV replicative capacity, ER stress signaling, inflammation, cell death, and tumorigenesis resulting from PreS1 deletions were investigated through RESULTS: The PreS1Del variant selectively activates the IRE1 pathway, mainly via enhanced colocalization between the ER and HBsAg in infected hepatocytes. This leads to enhanced HBV replication and production of tumor-promoting inflammatory cytokines and IL6 and CONCLUSIONS: PreS1Del leads to enhanced HBV replication and HCC development through IRE1-JNK-IL6/COX2-mediated hepatocyte proliferation and liver inflammation. Inhibitors interfering with the IRE1-JNK-IL6 pathway could selectively inhibit HBV replication and inflammation in preS1Dels, suggesting their potential for the treatment of patients with CHB with preS1-deleted HBV variants. IMPACT AND IMPLICATIONS: Deletion of 15-21 nucleotides at the preS1 start codon is common in patients with CHB with HBV genotype C and is linked to HCC progression. However, the mechanisms underlying the distinct phenotype of this variant remain largely unknown. We found that the preS1Del variant selectively activates the IRE1 pathway, primarily through enhanced IRE1-JNK-IL6 signaling. Inhibition of either the IRE1-JNK pathway or IL6 reduced HBV replication and tumor load in