The natural history of hepatitis B virus (HBV) infection is complex and variable and is greatly influenced by the age at infection, the level of HBV replication, and host immune status. Chronic HBV infection generally consists of an early replicative phase with active liver disease (hepatitis B e antigen [HBeAg]-positive chronic hepatitis) and a late low or nonreplicative phase with HBeAg seroconversion and remission of liver disease (inactive carrier state). After HBeAg seroconversion, some patients may have active hepatitis due to HBV variants not expressing HBeAg (HBeAg-negative chronic hepatitis). Morbidity and mortality are linked to development of cirrhosis and hepatocellular carcinoma. Survival is reasonably good (about 85% probability at 5 years) in compensated cirrhosis but very poor in decompensated cirrhosis. Both cirrhotic and noncirrhotic patients with sustained reduction of HBV replication and normalization of aminotransferase after interferon alfa therapy have a reduced risk for liver-related complications.