Severe acute exacerbation is a unique presentation of chronic hepatitis B characterized by very high alanine aminotransferase level accompanied by jaundice and hepatic decompensation. The underlying pathogenesis is likely related to excessive immune clearance, which may be related to the genotype of hepatitis B virus. The mortality is very high once hepatic encephalopathy develops, but some patients can recover to almost normal liver function in contrast to patients with end-stage liver cirrhosis. This condition should be differentiated from acute hepatitis B and other causes of acute hepatitis must be excluded. Conventional prognostic systems may not be applicable to severe acute exacerbation of chronic hepatitis B. In general, patients who have thrombocytopenia, hyperbilirubinemia and coagulopathy have a higher risk of mortality regardless of the serum alanine aminotransferase levels. There is no evidence that lamivudine treatment can reduce the short-term mortality of severe acute exacerbation. However, patients with severe acute exacerbation tend to have a higher rate of maintained virological response, higher rate of hepatitis B e antigen seroconversion and low rate of drug resistance on extended lamivudine treatment as compared to other chronic hepatitis B patients. Virological relapse and severe hepatitis reactivation is common after treatment cessation and therefore long-term antiviral treatment is recommended. Liver transplantation, particularly living donor liver transplantation, should be considered for patients who develop hepatic failure secondary to severe acute exacerbation.