The natural history of chronic hepatitis B in children is influenced by mode of transmission and varies with regional endemicity. Seroconversion rates were studied in 174 hepatitis B e antigen (HBeAg)-positive children who were of different ethnic origins and living in Canada. Overall, 40.2% became anti-HBeAg positive, and 8.6% were hepatitis B surface-antigen positive during a mean follow-up of 4.5 years. Spontaneous seroconversion rates were lower in Asian-born, mainly vertically infected, children, versus those born either in Canada or where horizontal transmission predominates (24% vs. 44%, P=.015). Kaplan-Meier analysis showed that the cumulative persistence of HBeAg after 13 years was 25% in Asian-born children, versus 6% in all others (P<.05). Treatment of 27 children accelerated seroconversion by 3 years, without influencing the proportion seroconverting over time. Thus, although Asian-born children seroconvert more slowly, a large proportion will seroconvert before adulthood. Because treatment appears to accelerate anti-HBe seroconversion, longitudinal studies are required in order to assess the long-term benefits of early treatment.