We used recombinant-DNA technology and gel electrophoresis to find hepatitis B virus DNA (HBV-DNA) in liver and tumor tissue from patients with hepatocellular carcinoma and chronic liver disease, and to study the integration of HBV-DNA into the genome of these tissues' cells. In 12 patients with hepatocellular carcinoma who had hepatitis B surface antigen (HBsAg) in their serum, integrated HBV-DNA was identified in the tumors; it was also found in tumors from three of eight patients who were seronegative for HBsAg but positive for antibody to HBsAg. In some cases, integrated HBV-DNA was also present in nontumorous liver tissue that had the same hybridization pattern or one different from that of the tumor. In five carriers of HBsAg who had evidence of the carrier state and chronic liver disease for less than two years, HBV-DNA was present but not integrated in liver tissue. In the two patients who had carried HBsAg for more than eight years, HBV-DNA was integrated into the host genome. These data suggest that integration of HBV-DNA into hepatocytes occurs during the course of persistent HBV infection and precedes development of gross neoplasm.