Intrauterine hepatitis B virus (HBV) infection has been suggested to be caused by transplacental transmission that cannot be blocked by hepatitis B vaccine. This would decrease the effectiveness of hepatitis B vaccine. This study examined the risk factors and mechanism of transplacental HBV transmission. A case-control study included 402 newborn infants from 402 HBsAg-positive pregnant women. Among these, 15 newborn infants infected with HBV by intrauterine transmission were selected as cases, and the rest as controls. A pathology study included 101 full-term placentas from the HBsAg-positive pregnant women above and 14 from HBsAg-negative pregnant women. Immunohistochemistry staining and HBV DNA in situ hybridization were used to estimate the association of intrauterine HBV infection and HBV infection in the placentas. HBeAg positivity in mothers' sera (OR = 17.07, 95%CI 3.39–86.01) and threatened preterm labor (OR = 5.44, 95%CI 1.15–25.67) were found to be associated with transplacental HBV transmission. The intrauterine infection rate increased linearly and significantly with maternal serum HBsAg titers (trend test P = 0.0117) and HBV DNA concentration (trend test P < 0.01). Results of the pathology study showed that HBV infection rates decreased gradually from the maternal side to the fetal side (trend test P = 0.0009) in the placental cell layers. There was a significant association between intrauterine HBV transmission and HBV infection in villous capillary endothelial cells (VCEC) in the placenta (OR = 18.46, P = 0.0002). The main risk factors for intrauterine HBV infection are maternal serum HBeAg positivity, history of threatened preterm labor, and HBV in the placenta especially the villous capillary endothelial cells. Previous reports of transplacental leakage of maternal blood causing intrauterine infection are confirmed. In addition, there appears to be a “cellular transfer” of HBV from cell to cell in the placenta causing intrauterine infection. This latter hypothesis needs to be confirmed. J. Med. Virol. 67:20–26, 2002. © 2002 Wiley-Liss, Inc.