Hepatitis delta virus (HDV) contains two types of hepatitis delta antigens (HDAg) in the virion. The small form (S-HDAg) is required for HDV RNA replication, whereas the large form (L-HDAg) potently inhibits it by a dominant-negative inhibitory mechanism. The sequential appearance of these two forms in the infected cells regulates HDV RNA synthesis during the viral life cycle. However, the presence of almost equal amounts of S-HDAg and L-HDAg in the virion raised a puzzling question concerning how HDV can escape the inhibitory effects of L-HDAg and initiate RNA replication after infection. In this study, we examined the inhibitory effects of L-HDAg on the synthesis of various HDV RNA species. Using an HDV RNA-based transfection approach devoid of any artificial DNA intermediates, we showed that a small amount of L-HDAg is sufficient to inhibit HDV genomic RNA synthesis from the antigenomic RNA template. However, the synthesis of antigenomic RNA, including both the 1.7-kb HDV RNA and the 0.8-kb HDAg mRNA, from the genomic-sense RNA was surprisingly resistant to inhibition by L-HDAg. The synthesis of these RNAs was inhibited only when L-HDAg was in vast excess over S-HDAg. These results explain why HDV genomic RNA can initiate replication after infection even though the incoming viral genome is complexed with equal amounts of L-HDAg and S-HDAg. These results also suggest that the mechanisms of synthesis of genomic versus antigenomic RNA are different. This study thus resolves a puzzling question about the early events of the HDV life cycle.