Chronic hepatitis B virus (HBV) infection is a major cause of cirrhosis and hepatocellular carcinoma in the United States and worldwide. Eradication of infection and prevention of complications of chronic infection are the dual goals of treatment. While therapeutic options were limited to interferon until the mid-1990s, anti-HBV drug development has exploded in the last 5 years, largely catalyzed by efforts directed at human immunodeficiency virus (HIV) infection.Interferon alfa and lamivudine are the two approved agents for treatment of chronic HBV infection. Interferon has both immune-modulating and antiviral actions, and its efficacy in the treatment of chronic HBV infection is well established. Compared with untreated controls, interferon, in doses of 5 MU daily or 10 MU 3 times weekly, increases hepatitis B e antigen loss by 20% and hepatitis B surface antigen loss by 6%. 1 Treatment benefits are long term in the majority of cases, and enhanced rates of viral clearance are observed in the years after treatment. Lamivudine is the only oral medication approved for treatment of chronic HBV infection. Lamivudine, the (-)enantiomer of 2Ј-deoxy-3Ј-thiacytidine, undergoes phosphorylation in hepatocytes to form 2Ј-deoxy-3Ј-thiacytidine triphosphate, the active molecule. Lamivudine competes with dCTP for HBV-DNA synthesis, and its incorporation terminates viral DNA synthesis. In placebo-controlled clinical trials, given at 100 mg daily for 12 months, it increased the rate of sustained suppression of HBV DNA by 17% to 33% and hepatitis B e antigen loss by 16% to 19%. 2,3 Relapse or rebound in HBV DNA was common when treatment was discontinued. While long-term lamivudine therapy has resulted in suppression of viral markers of ongoing viral replication and improved liver histology, the rate of treatment breakthrough due to the development of resistant mutants increases with duration of therapy. 4 After the first year of treatment, the incidence of lamivudine-resistant HBV is 14% to 32%. 2,3 Rebound of HBV-DNA replication after discontinuation of lamivudine therapy is likely related, in part, to the persistence of the covalently closed circular DNA (cccDNA) within the cell nucleus (Fig. 1). During infection, attachment and entry of HBV into the cell are followed by viral uncoating and translocation of the viral genome to the nucleus where it is converted to cccDNA with the help of the host DNA polymerase. The host RNA polymerase uses the cccDNA as a template for transcribing viral messenger RNA. Lamivudine and many other antiviral agents have no activity against the cccDNA form of HBV. Another potential reason for virologic relapse after discontinuation of lamivudine therapy is the existence of residual virus in "sanctuaries," such as bile duct epithelial cells or pancreatic islet cells. These privileged sites are presumably less accessible to lamivudine and will release virus that reinitiates the infection, when the antiviral agent is withdrawn. The ideal anti-HBV agent would reduce levels of cccDNA and have activity ...