It is well documented that perinatal transmission is the major cause of chronic HBV infection in China. However, the mechanisms of HBV perinatal transmission are not defined clearly. It is not known whether hepatitis B e antigen can cross the human placenta, and the rate of HBeAg decay in babies with and without HBV breakthrough has not been studied. In this study, HBV serological markers were investigated in 95 hepatitis B surface antigen positive pregnant women. These markers were also studied in the babies at birth and at the age of 6 months and 12 months. The data show that 7.4% (7/95) children were infected with HBV during the first year after birth despite receiving passive-active immunoprophylaxis with hepatitis B immune globulin and hepatitis B vaccine. The surface gene fragment of HBV DNA was cloned and sequenced following PCR amplification in 7 cases of HBsAg positive babies and their mothers. All babies had the same sequences as their mothers, although two babies also had sequences that would produce an amino acid substitution within the “a” determinant. Furthermore, we measured HBeAg titers and HBV DNA levels by using Abbott AxSYM system and LightCycler-based real-time fluorescence quantitative PCR in 54 mother-infant pairs. Thirty-three mothers were HBeAg positive, and 21 mothers were HBeAg negative. Seventy percent (23/33) of neonates from HBeAg-positive mothers were HBeAg positive at birth compared with 0% (0/21) of neonates from HBeAg negative mothers. HBeAg was present at higher titer in the birth sera of the babies with HBV breakthrough than in babies without breakthrough. HBeAg was cleared from the serum in all 19 babies without breakthrough. In 17 of these 19 babies, the HBeAg was cleared within 6 months, and in two babies clearance took 12 months. The mean serum HBV DNA level in the mothers of the 4 infants with HBV breakthrough was significantly higher than in the mothers of babies who did not become infected. In conclusion, this data suggests that HBeAg can cross the human placenta, and disappears from serum within 6 months in most babies. HBV DNA levels in hepatitis B carrier mothers are associated with the failure of HBIG and vaccine immunization, and the additional influence of transmitted HBeAg cannot be excluded. J. Med. Virol. 71:360–366, 2003. © 2003 Wiley-Liss, Inc.