The number of observed cases of occult hepatitis B virus infection (OBI) in eastern India has been increasing. Here, S gene mutations were identified in apparently healthy individuals with OBI, and the S protein variants from these patients were characterized in vitro. Plasma samples from 217 healthy blood donors were collected from three different regions in eastern India and screened for hepatitis B virus (HBV) infection using a nucleic acid amplification test and immunoassays for serological markers. S protein variants found in positive plasma samples were characterized using a liver cell line. Twenty-nine of the 217 plasma samples tested, were positive for HBV DNA and were negative for hepatitis B surface antigen (HBsAg) and antibody to HBV core antigen (anti-HBc). Sequencing of the HBV S gene revealed a novel S protein mutation (L173H) in an area outside the major hydrophilic region. Known OBI-associated mutations (S34L, P178R), a mutation resulting in a stop codon at position 196, associated with lamivudine-resistance, the substitution I81T, and a dual mutation (G145A and Q101H) were also identified. S proteins containing these mutations, produced by transfection of human hepatoma (Huh7) cells with recombinant plasmids, were undetectable or gave significantly weaker signals than the wild-type control, despite similar levels of S mRNA production for the mutant and wild-type plasmids. The OBI cases in this study were unexpectedly seronegative. In vitro analysis revealed that the mutations identified here caused the virus to evade immunodetection using commercial immunoassays, thereby rendering a large portion of the population "silently" infected with HBV.