Nucleoside analogue therapy allows safe, long-term suppression of hepatitis B virus (HBV) and is a major milestone in the treatment of chronic hepatitis B. Entecavir has recently been approved by the U.S. Food and Drug Administration and is not only more potent than lamivudine and adefovir, but it is also associated with a very low rate of drug resistance. Peginterferon, which has been shown to be more potent than conventional interferon, has recently been licensed in Europe and in the United States. Despite these advances, however, the clinician still faces several challenges in treating this relatively complex disorder. Controversies and unresolved issues remain, including the question of whether the thresholds for alanine aminotransferase and HBV DNA levels recommended in the published treatment guidelines are too restrictive. Another complication is the differing levels of sensitivity and dynamic range of the assays for serum HBV DNA. Finite courses of treatment are associated with low rates of virologic response, but drug resistance occurs when nucleoside analogue monotherapy is used long term. The role for combination therapy remains unclear. Much has been accomplished over the past decade, but much remains to be done.