Chronic hepatitis B virus (HBV) infection has a complicated course. Three phases are identified: an immune tolerant phase with high HBV DNA and normal alanine aminotransferase (ALT) levels associated with minimal liver disease; an immune active phase with high HBV DNA and elevated ALT levels with active liver inflammation; and an inactive phase with HBV DNA levels < 2000 IU/mL and normal ALT levels with minimal inflammation and fibrosis on liver biopsy. Affected persons can move progressively from one phase to the next and may revert backward. The primary adverse outcomes of chronic HBV infection are hepatocellular carcinoma (HCC) and cirrhosis. Published natural history studies were reviewed and ranked by the strength of evidence regarding the study design. Factors with the highest evidence of risk for development of HCC or cirrhosis from population-based prospective cohort studies include male sex, family history of HCC, HBV DNA level above 2000 IU/mL in persons above age 40, HBV genotypes C and F, and basal core promoter mutation. Those with the next highest level of evidence include aflatoxin exposure, and heavy alcohol and tobacco use. Improved methods to identify persons at highest risk of developing HCC or cirrhosis are needed to allow intervention earlier with antiviral therapy in appropriate patients. Future studies should include prospective follow-up of established population-based cohorts as well as new cohorts recruited from multiple centers stratified by HBV genotypes/subgenotypes and clinical phase to determine the incidence of the various HBV phases, HCC, and cirrhosis. Also, nested case-control studies assessing immunological and host genetic factors among persons with active and inactive disease phases, HCC, and cirrhosis could be conducted using these types of cohorts.