OBJECTIVE: The present study was carried out to evaluate the economic burden of chronic hepatitis B (CHB) and its complications, and to evaluate the clinical and economic benefits of treatment of CHB patients with lamivudine for one year in Shanghai, China. METHODS: The components of the economic burden of disease included direct medical costs, non-medical costs and indirect work related costs per patient per year in CHB patients (n=634), those who had progressed to compensated hepatocirrhosis (n=294), decompensated hepatocirrhosis (n=231) and hepatocellular carcinoma (n=236), respectively. The direct medical costs per patient per year were calculated according to the mean expenses and utilisation rate for each outpatient visit and hospitalisation. The direct non-medical costs were estimated based on expenses for nutrition products and transportation. Mean indirect costs were calculated using average time lost from work in one year. Clinical and economic benefits of CHB treatment with lamivudine were estimated using cost data from the burden of illness study in Shanghai and seroconversion rate data in Asian patients and cirrhosis progression rates from lamivudine clinical trials. RESULTS: Treatment of patients with ALT>2xULN with lamivudine for 1 year is estimated to result in net total cost savings of US$51 per patient. CONCLUSION: Chronic hepatitis B infection not only compromises the patient’s normal daily activities, but also imposes a significant economic burden on patients and their families. By reducing the rate of progression to cirrhosis, treatment of CHB patients with lamivudine for one year can result in overall net cost savings.