Antiviral therapy improves the clinical outcomes of patients with chronic hepatitis B (CHB), including those with cirrhosis. In the present study, we validated the Baveno VII definition of recompensation and explored the criteria for stable improvement of liver function tests in entecavir-treated patients with CHB-related decompensated cirrhosis. In this multicentre prospective study, patients with decompensated (ascites) CHB-related cirrhosis were enrolled and treated with entecavir for 120 weeks. Patients were followed up for clinical events, viral and biochemical tests, and ultrasonography every 6 months. The recompensation rate per Baveno VII criteria was calculated. Multivariate regression models were used to identify the predictors of recompensation. Finally, the criteria for stable improvement of liver function tests were explored. Of the 320 recruited patients, 283 completed the 120-week study, with 261/283 (92.2%) achieving HBV DNA levels <20 IU/ml and 171/283 (60.4%) achieving resolution of ascites, encephalopathy, and absence of recurrent variceal bleeding for at least 12 months. We identified model for end-stage liver disease <10 and/or liver function tests within Child-Pugh Class A (albumin >35 g/L, international normalised ratio <1.50 and total bilirubin <34 μmol/L) as the criteria for stable improvement of liver function tests. Accordingly, 56.2% (159/283) of patients fulfilled the Baveno VII definition of recompensation with a stable improvement of liver function tests defined by the current study. Our study defined the criteria for a stable improvement of liver function tests required by the Baveno VII definition of recompensation in patients with CHB-related decompensated cirrhosis on antiviral therapy. The criteria derived from this multicentre prospective study warrant further validation in patients with cirrhosis of other aetiologies. Decompensation of cirrhosis marks the point at which the liver is no longer able to function normally (and symptoms become apparent). Recently the idea of recompensation was proposed for individuals who may experience an improvement in liver function if the underlying cause of their liver disease is addressed (e.g. antivirals for viral cirrhosis). Herein, we show that over 50% of patients with hepatitis B-related decompensated cirrhosis treated with antivirals could recompensate and we propose laboratory criteria which could be used to define recompensation.