Analysis of the preS1 gene of hepatitis B virus was used to define two nosocomial outbreaks of HBV infection. In an outbreak in an oncology unit we had previously shown by single stranded conformational polymorphism (SSCP) analysis of a 189 bp fragment of the preS1 gene, that 52 children were infected with HBV strains that displayed only 5 different SSCP profiles. Sequencing of a 383 bp fragment encompassing the entire preS1 gene, revealed that isolates with same SSCP profile were identical in sequence across the entire preS1 gene, confirming that those patients with the same SSCP pattern had epidemiologically linked infections. A second outbreak involved 8 liver transplant patients from two different hospitals, 5 of whom were from the same hospital at which the oncology outbreak had occurred. Two of these 5 patients had HBV strains that were identical to strains from the oncology unit and nosocomial transmission probably accounted for the infections in these two, while diversity of both SSCP profiles and sequence data of remaining 6 patients supported the conclusion that they had not been infected from a common source. The donor liver is believed to be the most likely source of infection in these patients. HBV isolates from patients infected in the community were used as a standard for the general degree of preS1 sequence variation of local HBV strains. Phylogenetic analysis and comparison with reference HBV clones revealed that of 27 local HBV strains, genotypes A and D occurred most frequently and were identified in 14 and 12 patients respectively, while genotype C was detected in one patient.