Hepatitis B virus (HBV) barely induces host interferon (IFN)-stimulated genes (ISGs), which allows efficient HBV replication in the immortalized mouse hepatocytes as per human hepatocytes. Here we found that transfection of Isg20 plasmid robustly inhibits the HBV replication in HBV-infected hepatocytes irrespective of IRF3 or IFN promoter activation. Transfection of Isg20 is thus effective to eradicate HBV in the infected hepatocytes. Transfection of HBV genome or ε-stem of HBV pgRNA (active pgRNA moiety) failed to induce Isg20 in the hepatocytes, while control polyI:C (a viral dsRNA analogue mimic) activated MAVS pathway leading to production of type I IFN and then ISGsg20 via the IFN-α/β receptor (IFNAR). Consistently, addition of IFN-α induced Isg20 and partially suppressed HBV replication in hepatocytes. Chasing HBV RNA, DNA and proteins by blotting indicated that ISG20 expression decreased HBV RNA and replicative DNA in HBV-transfected cells, which resulted in low HBs antigen production and virus titer. The exonuclease domains of ISG20 mainly participated in HBV-RNA decay. In vivo hydrodynamic injection, ISG20 was crucial for suppressing HBV replication without degrading host RNA in the liver. Taken together, ISG20 acts as an innate anti-HBV effector that selectively degrades HBV RNA and blocks replication of infectious HBV particles. ISG20 would be a critical effector for ameliorating chronic HBV infection in the IFN therapy.