Hepatitis B virus (HBV) isolates from Iranian patients around the country were characterized. Eighty-one complete genomes from HBV isolates were sequenced and analyzed. The studied population was grouped into three categories including inactive carriers, patients with chronic hepatitis, and patients with liver cirrhosis. Molecular and phylogenetic analyses revealed that Iranian patients were infected with HBV genotype D and subgenotype D1. The most common subtype was ayw2, followed by ayw3 and ayw4. Several deletions and insertions that had no correlation with disease outcome were observed in the HBV genomes. The most frequent mutation in the major hydrophilic region (MHR) of HBV surface antigen (HBsAg) was sP120S. Almost half of the patients studied carried precore (PC) mutant variants and one-third of the studied population was infected with variants carrying basal core promoter (BCP) mutations. PC and BCP mutations were observed in older patients, especially in those with chronic liver disease. Sixty-seven patients (82.7%) were HBeAg negative, and the prevalence of precore mutant isolates (G1896A) was higher in this group than in HBeAg-positive patients. Lamivudine drug resistance mutations were detected after 1 year of treatment in about 30% of lamivudine-treated patients. In conclusion, these results demonstrate that HBV subgenotype D1 is the only subgenotype circulating in Iran, and there is no evidence of any exotic genotype in the region. The HBV PC (G1896A) mutation may play an important role in the clinical outcome of the disease by increasing the risk of progressive liver disease among Iranian patients infected with HBV. J. Med. Virol. 84:414–423, 2012. © 2011 Wiley Periodicals, Inc.