Under most circumstances, hepatitis B virus (HBV) is noncytopathic. However, hepatocellular regeneration that accompanies each bout of hepatitis appears to be associated with increased integration of HBV DNA fragments expressing the virus encoded hepatitis B x antigen (HBxAg). Intrahepatic HBxAg staining correlates with the intensity and progression of chronic liver disease (CLD), and additional work has shown that HBxAg blocks immune mediated killing by Fas and by tumor necrosis factor alpha (TNFalpha). This is not only associated with the blockage of caspase activities by HBxAg, but also by the constitutive stimulation of hepatoprotective pathways, such as nuclear factor kappa B (NF-kappaB), phosphoinositol 3-kinase (PI3K), and beta-catenin (beta-catenin). HBxAg also appears to promote fibrogenesis, by stimulating the production of fibronectin. HBxAg also stimulates the production and activity of transforming growth factor beta1 (TGFbeta1) by several mechanisms, thereby promoting the profibrogenic and tumorigenic properties of this important cytokine. In addition, HBxAg appears to remodel the extracellular matrix (ECM) by altering the expression of several matrix metalloproteinases (MMPs), which may promote tumor metastasis. Hence, HBxAg appears to promote chronic infection by preventing immune mediated apoptosis of infected hepatocytes, by promoting the establishment and persistence of fibrosis and cirrhosis preceding the development of HCC, and by promoting the remodeling of EMC during tumor progression.