BACKGROUND: Knowledge of the outcome of chronic hepatitis B virus (HBV) infection is limited. OBJECTIVE: To determine the incidence of and risk factors for adverse events (hepatocellular carcinoma and end-stage liver disease) and clearance of hepatitis B e antigen (HBeAg) and surface antigen (HBsAg) in carriers of HBV. DESIGN: Population-based cohort study of hepatitis B carriers who were observed for a median of 12.3 years as part of an active surveillance program to detect carriers with hepatocellular carcinoma. SETTING: 126 communities in Alaska. PATIENTS: 1536 Alaska Natives with chronic hepatitis B. MEASUREMENTS: Bivariate comparisons, multivariable models, and other statistical methods were used to examine the relationships of risk factors to outcomes and clearance of HBeAg and HBsAg. RESULTS: 1536 chronic HBV carriers were followed up for 19 430 person-years from their first HBsAg-positive test result. At the first serologic test, 641 were HBeAg positive and 893 were anti-HBe positive. Older carriers were more likely than younger carriers to clear HBeAg (P < 0.001). The observed probability of clearing HBeAg within 10 years of diagnosis was 72.5%. Clearance of HBsAg occurred in 106 (7%) of all carriers and was positively associated with older age and positive result on initial anti-HBe test. The incidence of adverse events was 2.3 per 1000 carrier-years, and the incidence of hepatocellular carcinoma was 1.9 per 1000 carrier-years (2.3 in men and 1.2 in women). Risk for hepatocellular carcinoma increased with age, among those of Yupik Eskimo ethnicity, and among carriers who reverted from anti-HBe to HBeAg. CONCLUSION: In HBsAg-positive carriers, observed clearance of HBeAg was more than 70% during the first 10 years of follow-up.