The mechanism of action of hepatitis B immune globulin (HBIG) and immune serum globulin was sought in a reanalysis of a Veterans Administration cooperative study on needle-stick exposure to hepatitis B surface antigen (HBsAg)-positive blood. Sera from 296 exposed persons were tested for HBsAg, antibody to HBsAg (anti-HBs), and antibody to hepatitis B core antigen (anti-HBc) by radioimmunoassay. Type B hepatitis developed in three HBIG (2%) and in 12 ISG (8%) recipients. In contrast, subclinical infection (development of HBsAg or anti-HBs and anti-HBc without symptoms or jaundice) developed in 16 HBIG (10%) but only six immune serum globulin (4%) recipients. Thus, infection occurred equally in both groups but was more likely to be subclinical in HBIG recipients, indicating that HBIG permitted development of passive-active immunity to type B hepatitis. An additional 53 immune serum globulin recipients (36%) but only one HBIG recipient developed anti-HBs alone, without hepatitis, HBsAg, or anti-HBc. This response was more compatible with immunization by HBsAg than with infection. Ultracentrifugation analysis revealed occult HBsAg in the immune serum globulin but not the HBIG, indicating that some immune serum globulin preparations contain HBsAg and can induce active immunity to type B hepatitis.