In patients with autoimmune chronic liver disease, a defect in the regulatory system of the immune response allows proliferation of clones of cells reacting with hepatocyte antigens. Identification of these target antigens, their isolation, and purification will allow further study of the nature of the immune diathesis and permit development of specific therapy designed to eliminate the malregulated clones of immunocytes. The mechanisms resulting in hepatocyte damage during chronic HBV infection are more complex. Both lobular focal and periportal piecemeal necrosis of hepatocytes is seen. Current evidence is consistent with the view that focal necrosis represents T-cell lysis of hepatocytes containing replicating virus, whereas piecemeal necrosis is a reflection of an autoimmune response to native liver membrane antigens, initiated by viral replication. The latter response would be expected to be greatest during viral replication, but because of the increase in suppressor T-cell concentrations that occurs at this time, the liver membrane antibody response is largely suppressed. When viral replication ceases, in patients with normal suppressor cells, the liver membrane antibody response is suppressed. In some patients, suppressor cells are relatively reduced and the liver membrane antibody response continues after cessation of viral replication. At this stage, the composition of the inflammatory infiltrate in the liver is similar to that seen in autoimmune (lupoid) chronic active hepatitis. The destruction of hepatocytes containing integrated HBV-DNA is probably dependent on an immune response to HBs antigen. Failure of this elimination process, for immunogenetic or environmental reasons, results in persistence of clones of cells from which malignantly derived cells may ultimately arise. Adequate therapy of this condition must not only stop the replication of the virus, thereby reducing hepatic inflammatory activity, but eliminate clones of cells containing integrated HBV-DNA so that the danger of malignant transformation of hepatocytes is removed.