Although reovirus has been used in tests as a potential cancer therapeutic agent against a variety of cancer cells, its application to hepatocellular carcinoma cells, in which the hepatitis B virus (HBV) X (HBX) protein of HBV plays a primary role, has not yet been explored. Here, we describe experiments in which we use reovirus to treat Chang liver carcinoma cells expressing either a vector only (Chang-vec) or a vector encoding HBX protein (Chang-HBX). Although Chang-vec cells readily support reoviral proliferation and undergo apoptosis, Chang-HBX cells are highly resistant to reoviral infection and virus-induced apoptosis, even though HBX protein induces activation of Ras and inactivation of PKR, which are normally thought to enhance reoviral oncolysis. The resistance of Chang-HBX cells to reovirus may instead be explained by HBX-induced downregulation of death receptor 5 and activation of Stat1. Phosphorylated Stat1 activates interferon (IFN)-stimulated regulatory element (ISRE)- and IFN-gamma-activated sequence (GAS)-mediated transcription, leading to the production of IFN-beta, whereas the reduced expression of Stat1 with its siRNA results in a decrease in IFN-beta production, by which Chang-HBX cells eventually succumb to reovirus infection. This result further indicates that HBX induces the establishment of an antiviral state through Stat1 activation. Thus, it appears that active Ras does not override the antiviral effect mediated by the activation of Stat1. Accordingly, we report that HBX, an oncoprotein of HBV, can prevent reoviral oncolysis of hepatocellular carcinoma. This suggests there may be limits to the practical application of reovirus in the treatment of human cancers already expressing other oncoviral proteins.