Objective To evaluate the effect of lamivudine on the loss of serum hepatitis B virus (HBV) DNA, HBeAg/antiHBe seroconversion and ALT levels in chronic hepatitis B patients and its safety profile and tolerance compared with placebo. Methods Four hundred and twenty-nine patients with chronic HBV infection as defined by positive HBsAg, HBeAg and HBV DNA were enrolled and randomized into lamivudine and placebo groups. Three hundred and twenty-two patients received lamivudine 100 mg daily and 107 patients received placebo treatment for 12 weeks. Then, all patients were offered a further 9-month open label lamivudine treatment. The efficacy and safety were evaluated with clinical, biochemical, hematological and virological parameters. Results During the 12-week treatment period, 92.2% of lamivudine treated patients became HBV DNA negative (below 1.6 pg/ml) compared with only 14.1% of those receiving placebo (P < 0.01). At the end of 12 week, the sustained negative rate for HBV DNA in the lamivudine treated group was 78. 5% compared with the placebo group (11. 1%; P < 0.01). There was a trend to a high proportion of patients treated with lamivudine to lose HBeAg (8.1%) and develop antiHBe (10.2%) than treated with placebo (5.3% and 6.4% respectively), but this difference was not statistically significant. Patients with elevated ALT levels at baseline became normal in 60. 3% of the lamivudine treated group compared with the placebo group where only 27.5% were normal (P < 0.01). Lamivudine was well tolerated in a dose of (100 mg daily) and the overall incidence of adverse events was similar to that of the placebo. Conclusions Lamivudine (100 mg daily) is very effective in the inhibition of HBV replication, indicated by the rapid loss of serum HBV DNA, and often accompanied by a decrease of serum ALT levels. Lamivudine is well tolerated without severe adverse events during treatment.