Seventy-six children aged 1-13 years who were known to be positive for hepatitis B surface antigen and hepatitis B e antigen in serum for at least 6 months and who had biopsy-proven chronic hepatitis have been followed longitudinally for 1-12 years (mean, 5 years). Twenty-three of them are now young adults. Eight patients had acute type B hepatitis 12-24 months before entering the study, while 68 patients came to observation during a chronic phase. At the beginning of follow-up, all 76 children were positive in serum for hepatitis B virus DNA, and 44 (58%) had chronic active hepatitis, associated with cirrhosis in two cases. During follow-up, 23 (30%) patients remained hepatitis B e antigen-positive, most with unchanged biochemical and histological features. The other 53 (70%) cases seroconverted to hepatitis B e antibody and cleared hepatitis B virus DNA from serum, including 7 of 8 (87%) patients with acute hepatitis at presentation. After seroconversion, alanine aminotransferase levels normalized in all patients and remained normal in 49 patients (92.5%) throughout a mean observation period of 3 years. Five of these children, including 2 of 7 (29%) with previous acute hepatitis, eventually cleared hepatitis B surface antigen from their sera. Finally, 4 (7.5%) patients experienced a mild increase of alanine aminotransferase levels several months after seroconversion in the absence of hepatitis B virus replication or of delta virus superinfection. Clinical and virological parameters did not significantly differ between patients with or without acute onset; however, seroconversion occurred earlier, and the rate of hepatitis B surface antigen clearance was greater in the former than in the latter group. The present data indicate that approximately two thirds of children with hepatitis B e antigen- and hepatitis B virus DNA-positive chronic hepatitis clear hepatitis B virus DNA from their sera before reaching adulthood. After termination of viral replication, most patients achieve a sustained biochemical remission, suggesting the disappearance of disease activity. Reactivation of virus replication after hepatitis B e antibody seroconversion has never been observed in this series, although mild alanine aminotransferase level abnormalities could be detected in a minority of cases.