Host innate recognition triggers key immune responses for viral elimination. The sensing mechanism of hepatitis B virus (HBV), a DNA virus, and the subsequent downstream signaling events remain to be fully clarified. Here we found that type III but nottype I interferons are predominantly induced in human primary hepatocytes in response to HBV infection, through retinoic acid-inducible gene-I (RIG-I)-mediated sensing of the 5'-ε region of HBV pregenomic RNA. In addition, RIG-I could also counteract the interaction of HBV polymerase (P protein) with the 5'-ε region in an RNA-binding dependent manner, which consistently suppressed viral replication. Liposome-mediated delivery and vector-based expression of this ε region-derived RNA in liver abolished the HBV replication in human hepatocyte-chimeric mice. These findings identify an innate-recognition mechanism by which RIG-I dually functions as an HBV sensor activating innate signaling and to counteract viral polymerase in human hepatocytes.