The presence of antibodies to HTLV-III and markers of active hepatitis B virus replication was examined in a longitudinal study of 33 consecutive male homosexual HBsAg carriers. The mean follow-up time was 37 months (range = 4 to 109 months). All patients were initially hepatitis B virus DNA-positive and HBeAg positive. Antibodies to HTLV-III were detectable in eight patients while they were positive for both of these markers. One of them cleared hepatitis B virus DNA and seroconverted from HBeAg to anti-HBe. This corresponds to an annual clearance/seroconversion rate of 4% (95% confidence limits = 0 to 15%). In two patients, antibodies to HTLV-III appeared after clearance of hepatitis B virus DNA and HBeAg, and in one of them, hepatitis B virus DNA reappeared. Among the 25 patients negative for HTLV-III antibodies, the annual hepatitis B virus DNA clearance rate was 20% and HBeAg to anti-HBe seroconversion rate was 11% (95% confidence limits = 11 to 31% and 4 to 20 % respectively). The observed hepatitis B virus DNA clearance rates in the two groups were significantly different (p < 0.05). Disease activity, as determined by transaminase levels, was significantly lower in HTLV-III infected individuals as compared to individuals without HTLV-III infection (p < 0.05). Infection with HTLV-III may extend the period of active viral replication or even reactivate hepatitis B virus replication and seems to diminish inflammatory disease activity in chronic HBsAg carriers.