The impact of hepatitis B virus (HBV) infection on the outcome of renal transplantation (Tx) has been controversial. To determine the indication of renal Tx in patients infected by HBV, we investigated the long-term outcome of renal transplant patients with hepatitis B surface antigen (HBsAg). We analyzed 980 patients, including 18 HBsAg carriers, who underwent renal Tx and were immunosuppressed with cyclosporin in our institute. Fourteen out of 18 patients (77.8%) showed hepatic dysfunction after an average period of 17.8 months (range 1-65) after Tx. Four out of 14 patients (28.5%) with hepatic dysfunction died of liver failure due to fulminant hepatitis with functioning grafts between 15 and 71 months after Tx. The remaining 10 patients with hepatic dysfunction are alive up to the time of last follow-up; however, 5 of them lost their grafts because of rejection between 44 and 92 months after Tx. Their liver function improved after withdrawal of cyclosporin. Only 4 patients did not develop chronic liver disease and have had functioning grafts for between 44 and 147 months. One patient died of subarachnoid hemorrhage 22 months after Tx. HBe antigen, antibody and HCV antibody status were not related to the occurrence of liver dysfunction after Tx. Four HBV-DNA-positive patients showed deteriorated liver function. Three patients with chronic active hepatitis confirmed by the biopsy were treated with interferon. Interferon improved liver function in 2 patients, however, 1 patient died of liver failure despite interferon therapy. Our data suggested that the presence of HBsAg is often associated with chronic liver disease leading to liver failure regardless of HBe and HCV status after Tx. The indication of renal Tx in patients with HBsAg should be determined carefully giving consideration to these results.