Distribution of hepatitis B virus (HBV) genotypes/subgenotypes is geographically and ethnologically specific. In the Indonesian archipelago, HBV genotype C (HBV/C) is prevalent with high genome variability, reflected by the presence of 13 of currently existing 16 subgenotypes. We investigated the association between HBV/C molecular characteristics with host ethnicity and geographical distribution by examining various subgenotypes of HBV/C isolates from the Asia and Pacific region, with further analysis on the immune epitope characteristics of the core and surface proteins. Phylogenetic tree was constructed based on complete HBV/C genome sequences from Asia and Pacific region, and genetic distance between isolates was also examined. HBV/C surface and core immune epitopes were analyzed and grouped by comparing the amino acid residue characteristics and geographical origins. Based on phylogenetic tree and geographical origins of isolates, two major groups of HBV/C isolates--East-Southeast Asia and Papua-Pacific--were identified. Analysis of core and surface immune epitopes supported these findings with several amino acid substitutions distinguishing the East-Southeast Asia isolates from the Papua-Pacific isolates. A west-to-east gradient of HBsAg subtype distribution was observed with adrq+ prominent in the East and Southeast Asia and adrq- in the Pacific, with several adrq-indeterminate subtypes observed in Papua and Papua New Guinea (PNG). This study indicates that HBV/C isolates can be classified into two types, the Asian and the Papua-Pacific, based on the virus genome diversity, immune epitope characteristics, and geographical distribution, with Papua and PNG as the molecular evolutionary admixture region in the switching from adrq+ to adrq-.