The incidence of hepatocellular carcinoma (HCC) was prospectively studied in 251 chronic hepatitis patients, and was compared between the 127 cases of hepatitis B and 124 cases of hepatitis C. All patients were diagnosed by needle biopsy on entering the study, and the cases consisted of chronic persistent hepatitis (CPH), chronic active hepatitis (CAH)2a, and CAH2b (cirrhosis was not included). Of the cases of chronic hepatitis B, 5 cases of HCC (3.9%) were detected; among the chronic hepatitis C cases, 13 cases (10.4%) were detected. Thus, although the mean follow-up periods were in the same range, the incidence of hepatocellular carcinoma was 2.7 times higher in hepatitis C than in hepatitis B (chi 2 = 3.116, P < .05). Using the Kaplan-Meier method, the incidence of HCC was significantly higher in chronic hepatitis C (P = .0194, generalized Wilcoxon test). In hepatitis C, the incubation period until HCC was detected was shorter when the liver disease was more advanced. Such a tendency was not observed in hepatitis B. In the 13 cases of HCC occurring in chronic hepatitis C, noncirrhotic liver was seen in only 1 case (7.7%), whereas 2 of the 5 cases of HCC (40%) in chronic hepatitis B were noncirrhotic. The prevalence of hepatitis C virus (HCV) genotypes II and III was the same in the total followed cases and HCC cases.