The histologic findings in the original liver obtained from 9 liver allograft patients with active B virus hepatitis were compared with 28 posttransplant pathology specimens. All specimens were studied with the use of light and immunohistochemical microscopy in conjunction with pertinent clinical data. Eight of the 9 patients had chronic active hepatitis B (HB) with cirrhosis, prior to transplant, one of which had coexistent hepatocellular carcinoma. The ninth patient had fulminant hepatic necrosis secondary to acute HB prior to transplantation. In all of the patients with chronic HB prior to transplantation who survived more than 2 months after transplantation recurrent infection of the graft developed despite perioperative HB immunoglobulin therapy. The patient with acute fulminant hepatitis B pretransplant has done well postoperatively and has evidence of HB virus immunity (positive anti-HBs) 15 months after transplantation. Examination of tissue specimens obtained during episodes of allograft dysfunction in these 9 patients indicate that pathologic alterations of active HB infection of the allograft are associated with a preferential lobular insult, whereas those occurring in rejection preferentially involve portal tract structures. Serologic data combined with biopsy histopathologic data are essential in distinguishing between the two quite different events.