Chronic hepatitis B infection is a global health problem that affects about 300 million people. Of these, 75% are Chinese. Most Chinese who become chronic carriers, contract the virus during the perinatal period. The natural history of these chronic hepatitis B carriers includes an initial immune tolerance phase, followed by immune clearance and an inactive hepatitis B non-replicative phase with the development of cirrhosis that may be complicated by hepatocellular carcinoma. The classification of hepato-cellular carcinoma has recently been revised. Based on immunohistochemical studies, it has been found that patients with hepatocellular carcinoma and biliary markers have a poorer survival than patients with hepatocellular carcinoma but who have negative biliary markers. Sometimes, a fourth phase, a hepatitis B envelope-negative hepatitis B virus replicative phase, reflecting the emergence of a pre-core mutant strain, may follow. Our improved understanding of the natural history of chronic hepatitis B infection has led to more effective approaches towards the control of this viral infection and its sequelae. Most importantly, immunisation against hepatitis B virus in the perinatal setting has been shown to prevent chronic infection.