Of the estimated 50 million new cases of hepatitis B virus (HBV) infection diagnosed annually, 5-10% of adults and up to 90% of infants will become chronically infected, 75% of these in Asia where hepatitis B is the leading cause of chronic hepatitis, cirrhosis and hepatocellular carcinoma (HCC). In Indonesia, 4.6% of the population was positive for HBsAg in 1994 and of these, 21% were positive for HBeAg and 73% for anti-HBe; 44% and 45% of Indonesian patients with cirrhosis and HCC, respectively, were HBsAg positive. In the Philippines, there appear to be two types of age-specific HBsAg prevalence, suggesting different modes of transmission. In Thailand, 8-10% of males and 6-8% of females are HBsAg positive, with HBsAg also found in 30% of patients with cirrhosis and 50-75% of those with HCC. In Taiwan, 75-80% of patients with chronic liver disease are HBsAg positive, and HBsAg is found in 34% and 72% of patients with cirrhosis and HCC, respectively. In China, 73% of patients with chronic hepatitis and 78% and 71% of those with cirrhosis and HCC, respectively, are HBsAg positive. In Singapore, the prevalence of HBsAg has dropped since the introduction of HBV vaccination and the HBsAg seroprevalence of unvaccinated individuals over 5 years of age is 4.5%. In Malaysia, 5.24% of healthy volunteers, with a mean age of 34 years, were positive for HBsAg in 1997. In the highly endemic countries in Asia, the majority of infections are contracted postnatally or perinatally. Three phases of chronic HBV infection are recognized: phase 1 patients are HBeAg positive with high levels of virus in the serum and minimal hepatic inflammation; phase 2 patients have intermittent or continuous hepatitis of varying degrees of severity; phase 3 is the inactive phase during which viral concentrations are low and there is minimal inflammatory activity in the liver. In general, patients who clear HBeAg have a better prognosis than patients who remain HBeAg-positive for prolonged periods of time. The outcome after anti-HBe seroconversion depends on the degree of pre-existing liver damage and any subsequent HBV reactivation. Without pre-existing cirrhosis, there may be only slight fibrosis or mild chronic hepatitis, but with pre-existing cirrhosis, further complications may ensue. HBsAg-negative chronic hepatitis B is a phase of chronic HBV infection during which a mutation arises resulting in the inability of the virus to produce HBeAg. Such patients tend to have more severe liver disease and run a more rapidly progressive course. The annual probability of developing cirrhosis varies from 0.1 to 1.0% depending on the duration of HBV replication, the severity of disease and the presence of concomitant infections or drugs. The annual incidence of hepatic decompensation in HBV-related cirrhosis varies from 2 to 10% and in these patients the 5-year survival rate drops dramatically to 14-35%. The annual risk of developing HCC in patients with cirrhosis varies between 1 and 6%; the overall reported annual detection rate of HCC in surveillance studies, which included individuals with chronic hepatitis B and cirrhosis, is 0.8-4.1%. Chronic hepatitis B is not a static disease and the natural history of the disease is affected by both viral and host factors. The prognosis is poor with decompensated cirrhosis and effective treatment options are limited. Prevention of HBV infection thorough vaccination is still, therefore, the best strategy for decreasing the incidence of hepatitis B-associated cirrhosis and HCC.