The existence of HBV as quasispecies is thought to be favoured by the infidelity of HBV RT, which would account for the emergence of the many natural mutants with point substitutions. RT infidelity may also underlie the hypermutation phenomenon. Indeed, the oft-reported point mutation in the preC gene that leads to failure of HBeAg synthesis may be driven by a hypermutation-related mechanism. The presence of mutants with deletions and insertions involving single nucleotides and oligonucleotides at specific positions in the genome, and of mutants with deletions of even longer stretches particularly in the C gene, suggests that other mutagenic mechanisms operate. Candidates include slippage during mispairing between template and progeny DNA strand, the action of cellular topoisomerase I, and gene splicing using alternative donor and acceptor sites. Natural substitutions, deletions or insertions involving the Cp/ENII locus in the X gene can significantly alter the extent of viral replicative activity. Similar mutations occurring at other locations of Cp/ENII, and at B-cell epitope sites of the S gene are associated with failure to detect serological markers of HBV infection. HBV variation can also arise from recombination between coinfecting strains. S gene mutations that become evident following HBIG administration and HBV vaccination are all point substitutions, as are mutations in functional RT domains of the P gene after treatment with viral RT-inhibitory drugs. Widespread and long-term use of prophylactic and therapeutic agents may potentially generate serologically occult HBV variants that might become difficult to eradicate. Copyright © 1999 John Wiley & Sons, Ltd.