Chronic hepatitis B (CHB) is a condition of global prevalence and its sequelae include cirrhosis and hepatocellular carcinoma. The natural history of CHB is a complex interplay of virological, environmental and host factors. The dynamic relationship between the virus and host evolves over the duration of the infection and different phases of the disease have been observed and described. These have been conceptualized in terms of the state of balance between the host immune system and the hepatitis B virus and have been given the labels immune tolerant, immune clearance, immune control and immune escape although other nomenclature is also used. Host factors, such as age at infection, determine progression to chronicity. Virological factors including hepatitis B viral load, mutations and genotype also have an impact on the adverse outcomes of the infection, as do hepatotoxic cofactors such as alcohol. Our understanding of the natural history of CHB has evolved significantly over the past few decades and characterizing the phase of disease of CHB remains an integral part of managing this virus in the clinic.