This review updates the treatment of chronic hepatitis B infection. Complete eradication of hepatitis B virus (HBV) is not possible, so the efficacy of treatment has to be assessed by whether it can limit long-term cirrhosis-related complications. We discuss two major groups of treatments--immunomodulators (interferon alfa, thymosin alpha1, therapeutic vaccines) and nucleoside analogues (lamivudine, adefovir, entecavir, emtricitabine, beta-L-2'-deoxythymidine). To date, interferon alfa and lamivudine are the only two agents approved for chronic hepatitis B. Interferon alfa achieves a short-term outcome of around 20-30% loss of HBeAg. The efficacy is lower in Chinese patients, who are immunotolerant to HBV because of acquisition of the disease during early childhood, than in white patients. This difference is further confirmed on long-term follow-up. Interferon alfa does not affect the development of cirrhosis-related complications in Chinese patients, whereas in white patients, the frequency of long-term complications is reduced if interferon alfa is successful in inducing loss of HBeAg. Lamivudine profoundly suppresses viral replication and achieves an HBeAg seroconversion rate similar to that of interferon alfa. It is equally effective in Chinese and white patients because the main antiviral mechanism is through inhibition of reverse transcription of HBV during viral replication. However, long-term lamivudine therapy is associated with emergence of HBV variants, YMDD variants. Newer nucleoside analogues are being extensively investigated by studies in vivo and in vitro. Combination therapy with two or three nucleoside analogues or immunomodulators plus nucleoside analogues will be the future direction of treatment of chronic hepatitis B.