The presence of unique hepatitis B virus (HBV) variants has been investigated in two Chinese patients with chronic liver disease, whose sera were positive for HBV-DNA by dot blot hybridization or polymerase chain reaction (PCR) but hepatitis B surface antigen (HBsAg)–negative by conventional polyclonal antibody based immunoassays. PCR amplification of HBV-DNA followed by direct sequencing showed an insertion of six nucleotides, which introduced two additional amino acids between codons 122 and 123 in one patient (Isolate 1), whereas a nine nucleotide insertion in the other patient (Isolate 2) gave rise to three amino-acids between codons 123 and 124 immediately upstream from the ‘a’ determinant in the S gene. These insertions have not been described previously in any published sequences of the known subtypes and were absent from sequences of 30 HBsAg-positive Chinese patients from the same region. In the cases under study, the insertion is associated with four consecutive adenine molecules from nucleotides 516 to 519. It seems likely that this area is a hot spot for insertions in HBV. We found none of the previously described amino-acid deletions or substitutions in the pre-S1, pre-S2 and S genes, which are involved in unusual antigenic profiles. This finding suggests that genetic mutations in the S gene outside the ‘a’ determinant may be responsible for failure to detect HBsAg in some Chinese patients with chronic hepatitis caused by HBV infection. (HEPATOLOGY 1995;21:273–278.)