Hepatitis B virus DNA (HBV DNA) in serum was measured by a Spot hybridization technique in a consecutive series of 79 cases with chronic HBV infection from Taiwan. HBV DNA was found in 96.3% (52/54) of HBeAg‐positive, 66% (2/3) with neither HBeAg or anti‐HBe and in 63.6% (14/22) of anti‐HBe positive patients. The levels of HBV DNA in the HBe‐Ag‐positive patients were significantly higher than in the anti‐HBe positive patients (median, 944 vs. 58 pg per ml, p < 0.001). The mean ages increased from 28.7 years for the cases with high levels of HBV DNA, to 34.7 years for those with low levels (p < 0.01) and to 41.0 years in those without HBV DNA in serum (p < 0.05 when compared with those with low level of HBV DNA). Ninety per cent of patients (27/30) with high levels of HBV DNA showed only minor hepatic inflammatory activity, as did 91% (10/11) of those without HBV DNA. In contrast, histologic signs of chronic active hepatitis or chronic lobular hepatitis were demonstrated in 76% of cases (29/38) with low levels of HBV DNA. These data are consistent with the hypothesis that liver damage occurs during the period of clearance of hepatocytes supporting HBV replication, and are inconsistent with the view that HBV may be directly cytopathic. Thus, the natural history of chronic HBV infection may be divided into three phases. The high replicative phase, characterized by HBeAg reactivity in serum and only minor histological activity, the low replicative (immune clearance) phase, during which the serum is positive for HBeAg or anti‐HBe and histologic signs of chronic active liver disease are usually prominent, and finally, the nonreplicative phase, when the patient is anti‐HBe positive and there is no evidence of inflammatory liver disease.