The presence of hepatitis B e antigen (HBeAg) in serum indicates active viral replication in hepatocytes. HBeAg is thus a surrogate marker for the presence of hepatitis B virus DNA. We conducted a prospective study to determine the relation between positivity for hepatitis B surface antigen (HBsAg) and HBeAg and the development of hepatocellular carcinoma. In 1991 and 1992, we enrolled 11,893 men without evidence of hepatocellular carcinoma (age range, 30 to 65 years) from seven townships in Taiwan. Serum samples obtained at the time of enrollment were tested for HBsAg and HBeAg by radioimmunoassay. The diagnosis of hepatocellular carcinoma was ascertained through data linkage with the computerized National Cancer Registry in Taiwan and with death certificates. We performed a multiple regression analysis to determine the relative risk of hepatocellular carcinoma among men who were positive for HBsAg alone or for HBsAg and HBeAg, as compared with those who were negative for both. There were 111 cases of newly diagnosed hepatocellular carcinoma during 92,359 person-years of follow-up. The incidence rate of hepatocellular carcinoma was 1169 cases per 100,000 person-years among men who were positive for both HBsAg and HBeAg, 324 per 100,000 person-years for those who were positive for HBsAg only, and 39 per 100,000 person-years for those who were negative for both. After adjustment for age, sex, the presence or absence of antibodies against hepatitis C virus, cigarette-smoking status, and use or nonuse of alcohol, the relative risk of hepatocellular carcinoma was 9.6 (95 percent confidence interval, 6.0 to 15.2) among men who were positive for HBsAg alone and 60.2 (95 percent confidence interval, 35.5 to 102.1) among those who were positive for both HBsAg and HBeAg, as compared with men who were negative for both. Positivity for HBeAg is associated with an increased risk of hepatocellular carcinoma. Copyright 2002 Massachusetts Medical Society.