Hepatitis B virus (HBV) infection is a global health problem that causes a wide spectrum of liver disease, including acute or fulminant hepatitis, inactive carrier state, chronic hepatitis, cirrhosis, and hepatocellular carcinoma (HCC). The pathogenesis of hepatocyte damage associated with HBV is mainly through immune-mediated mechanisms. On the basis of the virus and host interactions, the natural history of HBV carriers who are infected in early life can be divided into four dynamic phases. The frequency, extent, and severity of hepatitis flares or acute exacerbation in the second immune clearance and/or fourth reactivation phase predict liver disease progression in HBV carriers. In the past decade, hepatitis B viral factors including serum HBV DNA level, genotype, and naturally occurring mutants predictive of clinical outcomes have been identified. The higher the serum HBV DNA level after the immune clearance phase, the higher the incidence of adverse outcomes over time. In addition, high viral load, genotype C, basal core promoter mutation, and pre-S deletion correlate with increased risk of cirrhosis and HCC development. As to the treatment of chronic hepatitis B, patients with high HBV DNA level and genotype C or D infection are shown to have a worse response to interferon therapy. In conclusion, serum HBV DNA level, genotype, and naturally occurring mutants are identified to influence liver disease progression and therapy of chronic hepatitis B. More investigations are needed to clarify the molecular mechanisms of the viral factors involved in the pathogenesis of each stage of liver disease and the response to antiviral treatments.