A prospective study on the natural course of hepatitis B surface antigen (HBsAg)-positive chronic active hepatitis (CAH) in 84 patients was conducted at the Taiwan Veterans General Hospital in Taipei. On presentation, 36% of the patients had jaundice and 94% had elevated serum transaminase activity in addition to clinical symptoms. Of the 84 patients with HBsAg-positive CAH, 76 were followed for an average of 46 months, and at the time of the last visit 46% either had evidence of progressive liver disease or had died. Of the 15 deaths, nine were due to complications of liver disease and six were due to primary hepatocellular carcinoma (PHC), alpha-Fetoprotein levels of greater than 400 ng/ml were found only in patients in whom PHC was detected. The course of HBsAg-positive CAH in this predominantly male Asian population was progressive, and deaths occurred either by liver failure, by bleeding esophageal varices, or by progression to PHC.