The significance of hepatitis B virus (HBV) genotypes for the heterogeneity of chronic HBV infection and severity of liver disease is not well understood. The aim of this study was to determine the distribution and virologic characteristics of HBV genotypes in China and possible association with the diversity of liver disease. The study includes 1096 chronic HBV carriers from nine provinces in China. We collected clinical and laboratory data and analysed the HBV strains in sera by polymerase chain reaction-restriction fragment length polymorphism (PCR-RFLP) and nucleotide sequencing techniques. The most common HBV genotypes were B (41%) and C (53%), while genotypes A and D were also found. A North-South divide was identified in genotype B and C distribution - genotype C was predominant in northern China, while genotype B was more prevalent in southern provinces. Patients with genotype B were younger than those with genotype C, and had a lower prevalence of HBeAg - 65%vs 72%, respectively (P = 0.03). However, the severity of liver disease did not differ significantly between patients infected with genotype B or C - neither when comparing liver function tests (1024 patients), nor hepatic inflammation and fibrosis (264 patients). Amongst 47 patients with genotype D (by PCR-RFLP), 37 (79%) were infected with a new subtype (designated Dc), having a recombination fragment from genotype C precore/core region. This is the first large-scale HBV genotype study from China and convincing documentation of the North-to-South gradient of genotypes C vs B in this country. HBV DNA recombination over the surface and precore/core genes increases the diversity of HBV strains and may have diagnostic and clinical implications.