To elucidate the biological importance of intrahepatic hepatitis D virus antigen, its expression was correlated with biochemical and histological inflammatory activity in 98 biopsy specimens from 68 patients seropositive for total antibody to the virus. Seventy five specimens were positive for intrahepatic nuclear antigen for HDV antigen accompanied by cytoplasmic HDV antigen in only one biopsy specimen. This group had significantly higher serum transaminase activities and inflammatory activity than the remaining cases that were negative for HDV antigen. Among the group positive for HDV antigen, there was no correlation between the proportion of hepatocytes containing HDV antigen and either serum transaminase activity or histological inflammatory indices. In 22 HDV antigen positive patients who had follow up biopsy specimens taken at a median of two years, the proportion with cirrhosis increased from 36% to 73%. Serum transaminase activities remained the same during this period, but the proportion of HDV antigen positive cells dropped. Follow up of 51 patients showed that 21 died or underwent liver transplantation within three years. The absence of an association between intrahepatic HDV antigen expression and progression of histological liver damage does not support the view that HDV is directly cytopathic to hepatocytes. Immune mediated mechanisms may have a role in the pathogenesis of chronic liver disease related to HDV infection.