To determine the outcome of chronic hepatitis in ESRD we studied all 358 renal transplant recipients and 295 hemodialysis patients treated for greater than 1 year since 1970. The incidence of chronic hepatitis (elevated SGOT for greater than 1 year) was 15% (N = 54) in transplanted and 3.4% (N = 10) in dialysis patients. Forty-eight percent (26) of transplanted and 50% (5) of dialysis patients were HBsAg positive. In the transplanted group, the clinical outcome of chronic hepatitis was significantly better in HBsAg-negative compared to HBsAg-positive patients; 11% died, none from liver disease, and 32% remitted after a mean follow-up from start of liver disease of 77.3 +/- 8.2 months, whereas in the HBsAg-positive group 54% (14) died, nine from liver disease, and one remitted after a follow-up of 90.2 +/- 8.9 months. Adverse prognostic factors (age, duration of diabetes, and heart disease) present before ESRD treatment began were similar in both groups, as was duration of follow-up. Only 14% (2/14) of HBsAg-negative patients progressed to chronic active hepatitis on liver biopsy compared to 71% (15/21) of HBsAg-positive patients. Histological stability in those with serial biopsies occurred in 66% (4/6) of HBsAg-negative patients, but in only 18% (13/16) of HBsAg-positive patients with a similar duration of follow-up. No dialysis patients died from liver disease. We conclude that chronic hepatitis occurs more frequently in transplanted than dialyzed patients, and that HBsAg-negative chronic hepatitis has a more benign, clinical, and histological outcome than chronic HBsAg-positive hepatitis in renal transplant recipients.