Two precore variants of hepatitis B virus occur in chronic carriers in the Chinese community in Hong Kong. One variant has a serine at amino acid (aa) 15, and the other has a stop codon at aa 28, which inhibits production of hepatitis B e (HBe) antigen (Ag). The serine 15 strain is shown here to produce antigenically normal amounts of HBeAg. These variants are mutually exclusive, probably due to sequence requirements for encapsidation, and are separate lineages. Sequential core sequences from patients with either variant revealed more aa substitutions in those who have the codon 28 change (P = .02), particularly T helper and B cell epitopes, implying different selection pressures. Most substitutions occurred around the time of selection of the stop codon, implying that complete loss of HBeAg, an immunomodulatory protein, is necessary for immune pressure on core epitopes. Serine 15 strains select small numbers of substitutions throughout the anti-HBe phase, probably because of persistent immunomodulation.