In the past 25 years remarkable progress has been made in our understanding of the natural history of chronic HBV. The infection is now perceived as having three consecutive phases: immune tolerance, immune clearance, and inactive carrier status, with possible reactivation episodes. Accumulating evidence indicates that antiviral therapy can prevent progression of HBV-related liver disease, particularly among patients with sustained response. Five agents are now approved for therapy of chronic hepatitis B: interferon-alpha (standard and pegylated), lamivudine, adefovir and entecavir. All five drugs are effective in suppressing HBV DNA levels and improving serum alanineaminotransferase levels and hepatic histology, but it is still unclear who should be treated, with which agent (or combination of agents), for how long, and what endpoints measure the success or failure of treatment. Until a drug therapy results in lasting virological remission in most patients after a reasonably short period of treatment, individualized treatment decisions will remain key to maximizing efficacy, and chronic HBV infection will continue to be treated as a liver disease rather than as an infectious disease.