Persistent hepatitis B viral (HBV) infection results in chronic hepatitis, liver cirrhosis, and hepatocellular carcinoma (HCC). Recent studies in animal models of viral infection indicate that the interaction between the inhibitory receptor, programmed death (PD)-1, on lymphocytes and its ligand (PD-L1) play a critical role in T-cell exhaustion by inducing T-cell inactivation. High PD-1 expression levels by peripheral T-lymphocytes and the possibility of improving T-cell function by blocking PD-1-mediated signaling confirm the importance of this inhibitory pathway in inducing T-cell exhaustion. We studied T-cell exhaustion and the effects of PD-1 and PD-L1 blockade on intrahepatic infiltrating T-cells in our recently developed mouse model of HBV persistence. In this mouse animal model, we demonstrated that there were increased intrahepatic PD-1-expressing CD8+ and CD4+ T cells in mice with HBV persistence, but PD-1 upregulation was resolved in mice which had cleared HBV. The Intrahepatic CD8+ T-cells expressed higher levels of PD-1 and lower levels of CD127 in mice with HBV persistence. Blockade of PD-1/PD-L1 interactions increased HBcAg-specific interferon (IFN)-γ production in intrahepatic T lymphocytes. Furthermore, blocking the interaction of PD-1 with PD-L1 by an anti-PD-1 monoclonal antibody (mAb) reversed the exhausted phenotype in intrahepatic T lymphocytes and viral persistence to clearance of HBV in vivo. Our results indicated that PD-1 blockage reverses immune dysfunction and viral persistence of HBV infection in a mouse animal model, suggesting that the anti-PD-1 mAb might be a good therapeutic candidate for chronic HBV infection.