Background/Aims: Chronic hepatitis B accounts for about 70% of chronic hepatitis in Korea. To evaluate the incidence of liver cirrhosis and to investigate contributing factors to its development in patients with chronic hepatitis B, the authors analyzed pathological and clinical factors associated with progression to decompensated liver cirrhosis. Methods: One hundred seventy-two subjects who were diagnosed as chronic hepatitis B by liver biopsy from January 1982 to December 1995 and followed up to July 1997 (mean duration; 70.0±30.2 months) were included in this study. During follow-up, decompensated liver cirrhosis was confirmed as development of esophageal varix, ascites, splenomegaly and/or hepatic encephalopathy (portal hypertension). Results: During the follow-up period, decompensated cirrhosis was identified in 18 among 172 patients (10.5%) and annual incidence was 1.5%. In patients who had experienced acute exacerbation and frequent episodes of acute exacerbation, decompensated liver cirrhosis was developed. Moreover, severe necroinflammatory change and fibrosis in initial biopsy specimen, low level of serum albumin, low platelet counts, and elevated alpha-fetoprotein (AFP) level have a close relationship with developing decompensated liver cirrhosis (p<0.05). Conclusions: We conclude that the presence of acute exacerbation and its frequency, degree of necroinflammatory and fibrotic change at initial biopsy, low level of serum albumin, low platelet counts and high AFP level are important factors for the development of decompensated liver cirrhosis in patients with chronic hepatitis B. (Kor J Gastroenterol 1999;34:764 - 773)