Hepatitis B virus (HBV) core protein consists of an N-terminal assembly domain and a C-terminal domain (CTD) with seven conserved serines or threonines that are dynamically phosphorylated/dephosphorylated during the viral replication cycle. Sulfamoylbenzamide derivatives are small molecular core protein allosteric modulators (CpAMs) that bind to the heteroaryldihydropyrimidine (HAP) pocket between the core protein dimer-dimer interfaces. CpAM binding alters the kinetics and pathway of capsid assembly and can result in the formation of morphologically "normal" capsids devoid of viral pregenomic RNA (pgRNA) and DNA polymerase. In order to investigate the mechanism underlying CpAM inhibition of pgRNA encapsidation, we developed an immunoblotting assay that can resolve core protein based on its phosphorylation status and demonstrated, for the first time, that core protein is hyperphosphorylated in free dimers and empty capsids from both mock-treated and CpAM-treated cells but is hypophosphorylated in pgRNA- and DNA-containing nucleocapsids. Interestingly, inhibition of pgRNA encapsidation by a heat shock protein 90 (HSP90) inhibitor prevented core protein dephosphorylation. Moreover, core proteins with point mutations at the wall of the HAP pocket, V124A and V124W, assembled empty capsids and nucleocapsids with altered phosphorylation status. The results thus suggest that core protein dephosphorylation occurs in the assembly of pgRNA and that interference with the interaction between core protein subunits at dimer-dimer interfaces during nucleocapsid assembly alters not only capsid structure, but also core protein dephosphorylation. Hence, inhibition of pgRNA encapsidation by CpAMs might be due to disruption of core protein dephosphorylation during nucleocapsid assembly.IMPORTANCE Dynamic phosphorylation of HBV core protein regulates multiple steps of viral replication. However, the regulatory function was mainly investigated by phosphomimetic mutagenesis, which disrupts the natural dynamics of core protein phosphorylation/dephosphorylation. Development of an immunoblotting assay capable of resolving hyper- and hypophosphorylated core proteins allowed us to track the phosphorylation status of core proteins existing as free dimers and the variety of intracellular capsids and to investigate the role of core protein phosphorylation/dephosphorylation in viral replication. Here, we found that disruption of core protein interaction at dimer-dimer interfaces during nucleocapsid assembly (by CpAMs or mutagenesis) inhibited core protein dephosphorylation and pgRNA packaging. Our work has thus revealed a novel function of core protein dephosphorylation in HBV replication and the mechanism by which CpAMs, a class of compounds that are currently in clinical trials for treatment of chronic hepatitis B, induce the assembly of empty capsids.,Copyright © 2018 American Society for Microbiology.