Significant advances have been made, during the last 5 years, in the treatment of chronic hepatitis B. Several new antiviral agents: lamivudine, famciclovir, lobucavir and adefovir, have been shown to be safe and effective in inhibiting hepatitis B virus (HBV) replication. These compounds can be administered orally and are well tolerated. However, virus clearance is uncommon after short courses (<6 months) of therapy. Lamivudine and famciclovir have been evaluated in Phase III clinical trials in patients with chronic hepatitis B as well as in liver transplant recipients. Unfortunately, drug-resistant mutants involving the HBV polymerase gene, leading to breakthrough infection, have been reported in some patients who have received long courses (>/= 12 months) of treatment. The incidence, clinical outcome and biological significance of these mutants will be reviewed.