The envelope proteins of hepatitis B virus (HBV) include large (L), middle (M) and small (S) envelope proteins, with S protein being the most abundant viral transmembrane protein. Functional cure is currently regarded as the therapeutic goal for chronic hepatitis B. One of the key indicators of functional cure is the sustained clearance of circulating hepatitis B surface antigen (HBsAg). However, the mechanisms whereby intracellular S protein is degraded remain elusive. The previous study of this research group demonstrated that G12-CAR, a chimeric antigen receptor (CAR) specifically targeting hepatitis B virus envelope proteins, inhibited S protein secretion and promoted its intracellular degradation. In this study, Huh-7 hepatoma cells transfected by different vectors expressing S protein were treated with bafilomycin A1 and bortezomib, respectively inhibiting lysosomal autophagy and proteasomal degradation pathways. Subsequently, intracellular and extracellular S proteins were detected by Western blot and enzyme-linked immunosorbent assay (ELISA). The results showed that S protein can be degraded via both lysosomal and proteasomal pathways, while other HBV components also can regulate S degradation. Both L protein and 3′-untranslated region (3′-UTR) sequences of the viral S mRNA were identified to affect intracellular S degradation. Hence, these findings may offer novel therapeutic targets for promoting HBsAg clearance.