Chronic hepatitis B virus infection is a major medical problem worldwide. Apart from HBsAg carriers, hepatitis B virus has also been identified in some HBsAg-individuals with or without antibodies to viral antigens. The molecular mechanisms underlying hepatitis B virus persistence in HBsAg-individuals are unresolved, however. To identify a possible genetic basis for viral persistence, we cloned the viral genome from the liver of a patient serologically immune to hepatitis B virus infection. DNA sequence analysis of the complete viral genome identified numerous mutations in all viral genes. Analysis of the biological effects of these mutations revealed three major findings: a low level of HBsAg synthesis, absence of HBeAg production and a defect terminating viral replication. These data suggest that mutations accumulating during the natural course of hepatitis B virus infection may be a mechanism underlying viral persistence in HBsAg-individuals, presumably through escape from immune surveillance.