To investigate the factors associated with active disease among hepatitis B surface antigen (HBsAg) positive/hepatitis B e antigen (HBeAg)-negative chronic hepatitis B virus (HBV) infection we studied chronic HBV infected patients who had undetectable HBeAg at the first visit. HBV DNA was determined by the cross-linking assay (NAXCOR) and polymerase chain reaction (PCR). Mutations in the core promoter and precore regions and viral genotypes were studied. Clinical outcome of these patients were followed and categorized as: (i) relapse (ALT > 200 IU/L or three times the previous levels); (ii) active hepatitis (elevated ALT < 200 IU/L with concomitant detectable HBV DNA); or (iii) remission. A total of eighty-five patients were followed up for 5.5 ± 1.0 years. At first visit, 31 (36.5%) patients had elevated ALT levels, 12 (14.1%) had measurable HBV DNA by the cross-linking assay and 26 (30.6%) by PCR. Sixteen (18.8%) patients had hepatitis relapse, 13 (15.3%) had active hepatitis, and 56 (65.9%) remained in remission. Core promoter and precore stop codon mutants were found in 27 and 12 patients, respectively. Eleven and 20 had genotype B and C HBV, respectively. Initial elevated ALT and detectable HBV DNA were associated with active liver disease. Patient demographics, viral mutants or genotypes failed to predict disease activity. Hence, serum ALT and HBV DNA levels offer the best prediction of natural course of HBeAg-negative chronic HBV infection.