To determine whether patients with chronic hepatitis B who lose hepatitis B virus DNA and HBsAg from the serum completely resolve the hepatitis and virus infection, we evaluated serum and liver tissue from 11 patients who had lost HBsAg. These patients were evaluated for clinical, histological and serological features and for hepatitis B virus DNA by use of hybridization and polymerase chain reaction techniques. Liver biochemical test results were normal in all except two patients who had mild aminotransferase elevations. All sera were negative for hepatitis B virus DNA by direct hybridization, and only one was positive transiently by polymerase chain reaction. Liver histology was abnormal in all patients, but the changes were mild and markedly improved compared with biopsy specimens taken before loss of HBsAg. Liver tissue from 10 patients was positive for hepatitis B virus DNA by polymerase chain reaction but not by direct hybridization. These findings indicate that loss of HBsAg is associated with marked improvements in clinical and serum biochemical features of chronic hepatitis B, yet mild degrees of hepatitis and low levels of viral DNA may persist in the liver (HEPATOLOGY 1993;18:1313–1318.