Background and AimsInflammation drives progression of chronic liver disease. However, the triggers of inflammation remain undefined during chronic hepatitis B (CHB) because hepatic flares are spontaneous and difficult to capture. We used nucleoside analogue (NA) withdrawal to investigate early inflammatory events because liver damage after stopping therapy occurs in a predictable time frame. 11 CHB patients underwent 192 weeks of NA therapy before a protocol defined stop. Liver fine-needle aspirates (FNAs) were collected at baseline and 4-weeks post-withdrawal and analyzed using flow cytometry and single-cell RNA sequencing (scRNA-seq). Intrahepatic mononuclear cells (IHMCs) from uninfected livers were used to validate transcriptomic findings. At 4 weeks post NA-withdrawal, HBV DNA rebounded but alanine aminotransferase (ALT) levels remained normal, 7/11 patients developed ALT elevations (>2xULN) at later timepoints. There were no changes in cell frequencies between baseline and viral rebound. ScRNA-seq revealed upregulation of IFN stimulated genes (ISGs) and pro-inflammatory cytokineMIFupon viral rebound. In vitro experiments confirmed the type I IFN-dependent ISG profile whereasMIFwas induced primarily by IL-12. MIF exposure further amplified inflammatory cytokine production by myeloid cells. Our data show that innate immune activation is detectable in the liver before clinically-significant liver damage is detectable in the serum.