The purpose of this study was to identify mutations in the basic core promoter and enhancer II region of the hepatitis B virus (HBV) that might cause the HBV e antigen (HBeAg)‐negative phenotype and contribute to hepatocarcinogenesis in black African carriers of the virus. The basic core promoter/enhancer II overlaps with the X gene. HBV DNA from serum of 47 asymptomatic carriers and 50 patients with hepatocellular carcinoma and from 28 tumor and 10 nontumor liver tissues was amplified and sequenced directly. That part of the enhancer II region not overlapping the basic core promoter was completely conserved in all samples. Missense mutations at nucleotides 1809 and 1812 in the basic core promoter were found in 80% of all sequences and may represent wild‐type sequence in Southern African isolates. Nucleotide and amino acid divergences were higher in the basic core promoter of hepatocellular carcinoma patients when compared with asymptomatic carriers (P < .0001). This applied particularly to the paired 1762 adenine to thymine (1762^T) and 1764 guanine to adenine (1764^A) missense mutations, the prevalence of which was 66% in patients with hepatocellular carcinoma compared with 11% in asymptomatic carriers (P < .0001). There was no association between the presence of 1762^T1764^A and HBeAg negativity, although these mutations suppressed HBeAg titers in HBeAg‐positive patients. Suppression of HBeAg expression as well as alteration of the amino acid sequence of the X protein may play a role in hepatocarcinogenesis.