Hepatitis B virus (HBV) is a hepatotropic virus causing hepatitis, cirrhosis and hepatocellular carcinoma (HCC). The methylation status of the HBV DNA in its different forms can potentially provide insight into the pathogenesis of HBV-related liver diseases, including HCC, however this is unclear. The goal of this study is to obtain comprehensive DNA methylation profiles of the three putative CpG islands in the HBV DNA in infected livers, with respect to liver disease progression. The extent of methylation in these CpG islands was first assessed using bisulfite PCR sequencing with a small set of tissue samples, followed by analysis using both quantitative bisulfite-specific PCR and quantitative methylation-specific PCR assays in a larger sample size (n = 116). The level of HBV CpG island 3 methylation significantly correlated with hepatocarcinogenesis. We also obtained, for the first time, evidence of rare, non-CpG methylation in CpG island 2 of the HBV genome in infected liver. Comparing methylation of the HBV genome to three known HCC-associated host genes, APC, GSTP1, and RASSF1A, we did not identify a significant correlation between these two groups.