Persistent hepatitis B virus infection can lead to the development of chronic liver disease, cirrhosis and primary hepatocellular carcinoma. The only therapy of confirmed benefit in chronic hepatitis B is interferon alpha, which can lead to long-term benefit in only a third of highly selected patients. A number of new therapeutic approaches are being actively developed for treating chronic hepatitis B, including the use of nucleoside analogues, cytokines, antisense oligonucleotides, ribozymes, dominant negative mutants and DNA-based vaccines. Recent clinical trials with the nucleoside analogues have identified several important challenges for future drug development, in which the gene therapy-based approach may prove useful either alone or most probably in various combinations. Future clinical trials should aim to address these challenges using the new therapies so that the goal of substantial and sustained inhibition of viral replication with the accompanying improvement in the underlying liver disease can be achieved.