The pathogenesis of hepatitis B virus (HBV) infection is variable and can result in the development of acute and chronic hepatitis, cirrhosis and primary hepatocellular carcinoma (PHC). In this review, the relationship between the patterns of virus gene expression, host immunological responses, and liver pathology in chronic infection will be discussed. Available evidence suggests that the virus is not directly cytopathic to liver cells and that the pathologic sequelae to infection are mediated by both humoral and cellular immune responses against one or more virus gene products. In addition, chronic liver disease might also be mediated by autoaggressive immune responses that may be stimulated by the direct action of virus gene products upon host gene expression, by the lysis of infected hepatocytes by virus specific host immune responses, or by both. Given the complex and variable outcome of HBV infection, the lack of adequate treatment for chronic liver disease, and the fact that long-term infection dramatically increases the risk of developing PHC, the future provides challenges for devising new models to study, understand and successfully manipulate the pathogenesis of chronic HBV infection.