Formalin-fixed, paraffin-embedded specimens from 110 cases of chronic hepatitis and 108 cases of cirrhosis were stained for HBxAg by the avidin-biotin complex technique using specific antisera made against full-length HBxAg polypeptide or derived synthetic peptides. These tissues were also stained for the HBsAg and HBcAg by the peroxidase-anti-peroxidase method. Among patients with chronic hepatitis, 86% were HBsAg positive in liver cells, 60% were surface antigen positive and 32% were core antigen positive. Among patients with cirrhosis, 97% were HBsAg positive in liver cells, 72% were surface antigen positive and 17% were positive for core antigen. Staining specificity was demonstrated, in part, by using preimmune sera in the place of primary antibody, by blocking of the primary antibody with the appropriate antigen before assay and by testing uninfected liver controls. The persistence and high frequency of HBxAg in liver cells from patients with chronic liver disease suggest that it may play one or more important roles in the pathogenesis of chronic infection. It is possible that detection of HBxAg in the liver could be an additional new diagnostic marker for hepatitis B virus infection. However, the function(s) of HBxAg in the pathogenesis of the chronic liver disease, if any, remains to be explained.