We conducted a large-scale survey to determine the frequency and clinical significance of mutations in the pre-core region of hepatitis B virus (HBV). Sera from 263 patients with chronic HBV infection were analyzed by direct sequencing of PCR-amplified HBV DNA. Four major missense/nonsense mutations (M) were found: (M1) C --> T at nucleotide position 1856, Pro --> Ser at codon 15; (M2) G --> A at position 1896, Trp --> stop at codon 28; (M3) G --> A at position 1898, Gly --> Ser at codon 29; and (M4) G --> A at position 1899, Gly --> Asp at codon 29. The commonest conserved mutation was M0: T --> C at position 1858, Pro --> Pro at codon 15. We found that M1 and M2 were mutually exclusive, M3 was only found in association with M1, and M4 was predominantly found in association with M2. All patients with M1 but none of those with M2 had M0. The invariable coexistence of certain mutations in codon 15 and codons 28 and 29 and the mutual exclusion of other mutations in these two noncontiguous regions is related to the stem-loop structure of the pre-genome encapsidation sequence located in the precore/core region. M2 and M4 enhance the stability of the stem by providing two additional paired sites. M1 destroys an existing base pair. However, M1 only occurred in the presence of M0, which provides an extra paired site, and 50% of patients with M1 had M3, a compensatory mutation that restores base pairing at this site. Our data support the proposed secondary structure of the pre-genome encapsidation sequence. The primary function of the mutations in the pre-core region is to enhance stability of this secondary structure to ensure perpetuation of viral replication.