Entecavir (ETV) is a deoxyguanosine analog approved for use for the treatment of chronic infection with wild-type and lamivudine-resistant (LVDr) hepatitis B virus (HBV). In LVD-refractory patients, 1.0 mg ETV suppressed HBV DNA levels to below the level of detection by PCR (<300 copies/ml) in 21% and 34% of patients by Weeks 48 and 96, respectively. Prior studies showed that virologic rebound due to ETV resistance (ETVr) required preexisting LVDr HBV reverse transcriptase substitutions M204V and L180M plus additional changes at T184, S202, or M250. To monitor for resistance, available isolates from 192 ETV-treated patients were sequenced, with phenotyping performed for all isolates with all emerging substitutions, in addition to isolates from all patients experiencing virologic rebounds. The T184, S202, or M250 substitution was found in LVDr HBV at baseline in 6% of patients and emerged in isolates from another 11/187 (6%) and 12/151 (8%) ETV-treated patients by Weeks 48 and 96, respectively. However, use of a more sensitive PCR assay detected many of the emerging changes at baseline, suggesting that they originated during LVD therapy. Only a subset of the changes in ETVr isolates altered their susceptibilities, and virtually all isolates were significantly replication impaired in vitro. Consequently, only 2/187 (1%) patients experienced ETVr rebounds in year 1, with an additional 14/151 (9%) patients experiencing ETVr rebounds in year 2. Isolates from all 16 patients with rebounds were LVDr and harbored the T184 and/or S202 change. Seventeen other novel substitutions emerged during ETV therapy, but none reduced the susceptibility to ETV or resulted in a rebound. In summary, ETV was effective in LVD-refractory patients, with resistant sequences arising from a subset of patients harboring preexisting LVDr/ETVr variants and with approximately half of the patients experiencing a virologic rebound.