Liver biopsy plays a central role in treatment algorithms in patients with hepatitis B and remains the gold standard for evaluating hepatic pathology. The pathology of hepatitis B is diverse and reflects the natural history of infection. An acute hepatitic pattern with lobular disarray is seen in acute infection, during acute flares of disease, and with acute hepatitis D superinfection. In chronic hepatitis B, inflammation is less pronounced in the immune‐tolerant phase and is prominent during immune‐mediated viral clearance. Active inflammation appears to be the driving force for development of fibrosis. Inflammatory grades and fibrosis stage are assigned as is done for hepatitis C. Although current management guidelines recommend liver biopsies only in select patients based on age, viral levels, and hepatitis B e antigen status, these clinical and biochemical parameters do not show consistent correlations with liver histology. Liver biopsy also helps identify preneoplastic lesions including large cell and small cell change. Unlike in other causes of chronic hepatitis, immunostains are widely used and can help determine the phase of infection. Liver biopsies can also identify additional pathology that may contribute to liver disease such as steatohepatitis, iron overload, autoimmune hepatitis, and drug‐induced injury. Thus, liver biopsy can play an important role in staging and grading chronic hepatitis B and should be more widely used in assessing the need for therapy. (HEPATOLOGY 2009;49:S61–S71.)