Chronic hepatitis B virus (HBV) infection by definition is persistence of hepatitis B surface antigen (HBsAg) in the serum for > or =6 months. The risk of developing chronic HBV infection ranges from 90% in neonates to <5% in immunocompetent adults. HBV acquired by perinatal infection has a prolonged immune-tolerant phase, characterized by the presence of hepatitis Be antigen (HBeAg), high HBV-DNA and normal alanine aminotransferase (ALT) levels. Efficient and multi-specific helper and cytotoxic T-cell response is essential for controlling HBV infection. Chronic HBV infection is characterized by a state of HBV-specific T-cell hyporesponsiveness. The goal of therapy in chronic HBV infection is to eliminate or significantly suppress HBV replication and prevent the progression of liver disease to cirrhosis with the potential development of liver failure or hepatocellular carcinoma (HCC). In adults, drugs currently licensed for treatment of HBV infection: are interferon-alpha (IFN-alpha), lamivudine (LMV) and adefovir dipivoxil (ADV), the first two are also licensed to use in children. IFN-alpha has the advantage of having a more durable response, fixed duration of treatment and lack of resistant mutants. The disadvantages of IFN-alpha include need for thrice-weekly injections, higher cost and more side-effects compared with the nucleoside analogues. Nucleoside analogues can be given orally and used in decompensated cirrhosis and transplant recipients. ADV and newer drugs like tenefovir can successfully treat mutants produced after prolonged LMV therapy. Current protocols exclude children with immunotolerant HBV. Periodic screening with liver ultrasound scan and alpha-fetoprotein (AFP) in all children with chronic HBV infection is recommended. The severe shortage of cadaveric donor organs has led to the use of marginal (including anti-HBc-positive) cadaveric donor livers in selected transplant candidates with high medical urgency; 5-10% of all liver transplants are because of HBV. Using hepatitis B immunoglobulin and nucleoside analogues has made the outcome following liver transplantation for hepatitis B, comparable with, if not slightly better, than that in patients with other diagnoses. Future treatments should be based on the restoration of HBV-specific T-cell responses to levels similar to that seen in subjects controlling HBV.