Spontaneous mutations of hepatitis B virus (HBV) could influence the severity of liver disease. Since the basal core promoter (BCP) and the precore (Pc) regions are important for viral replication, these regions were examined for naturally occurring mutations and were correlated with the genotype, e antigen status, and severity of liver disease. In 82 patients with histologically confirmed chronic hepatitis B, the BCP and Pc regions were sequenced and aligned with known wild-type sequences. Sequence based HBV genotyping was done and HBV DNA was quantified. Thirty-three (40%) patients had decompensated chronic liver disease and the remaining patients had chronic hepatitis B. Forty-six (56%) patients were HBeAg positive. HBV genotype A was found in 28%, D in 65%, and B/C in 7.3%. The Pc G1896A mutation was more common in HBeAg-negative (33% vs. 2%, P < 0.01) patients and was genotype D specific. The Pc G1862T mutation was detected more often in HBeAg-positive than HBeAg-negative (37% vs. 11%, P < 0.01) patients and was genotype A specific (P < 0.01). BCP mutations at the 1,762/64 nucleotide positions were common in HBeAg negative than positive (36% vs. 13%, P < 0.05) and were equally common in different genotypes. TA 1–3 region mutations of the BCP were significantly higher in HBeAg-negative as compared to HBeAg-positive patients (78% vs. 26%, P < 0.01). BCP mutations had significantly higher HBV DNA levels. It is concluded that Pc G1862T mutant is Genotype A-specific but is not always associated with e antigen. The TA 1–3 rich mutations of BCP region are also associated with the absence of e antigen in Indian patients. J. Med. Virol. 78:1047–1054, 2006. © 2006 Wiley-Liss, Inc.