Serum alpha-fetoprotein level is often elevated in patients with chronic liver disease and patients with hepatocellular carcinoma. One of the most difficult problems frequently encountered in practice is differentiating hepatocellular carcinoma from chronic liver disease. This study investigated the specificity and predictive value positive of serum alpha-fetoprotein at various levels in the diagnosis of hepatocellular carcinoma, using 54 patients with histologically proven hepatocellular carcinoma and 200 patients with chronic liver disease (40 patients with chronic active hepatitis and 160 patients with cirrhosis) as nontumor controls. Among 254 patients, 170 (66.9%) were HBsAg+. A wide range of overlap (from 0 to 6,400 ng/ml) in the distribution of serum alpha-fetoprotein levels between hepatocellular carcinoma and chronic liver disease patients was observed mainly among HBsAg+ patients. In contrast, the overlapping range of serum alpha-fetoprotein levels between HBsAg- patients with hepatocellular carcinoma and chronic liver disease was remarkably narrow (from 0 to 200 ng/ml). Therefore the specificity and predictive value positive of alpha-fetoprotein at a given level were significantly lower in HBsAg+ than in HBsAg- patients, especially when alpha-fetoprotein was between 25 and 200 ng/ml. The specificities of alpha-fetoprotein at 200 ng/ml and 400 ng/ml in HBsAg+ patients were 79.8% and 91.5%, respectively, whereas these specificities were both 100% in HBsAg- patients. The predictive values positive at 200 ng/ml and 400 ng/ml in HBsAg+ patients were 53.6% and 72.5%, respectively, in contrast to 100% at both levels in HBsAg- patients. The serum alpha-fetoprotein level, which showed a predictive value positive of 95% in HBsAg+ hepatocellular carcinoma patients, was 3,200 ng/ml, whereas that in HBsAg- hepatocellular carcinoma patients, was 200 ng/ml. We conclude that serum HBsAg status should be considered when serum alpha-fetoprotein is measured as an independent test to diagnose hepatocellular carcinoma, and suggest that regular serum alpha-fetoprotein determination may be more useful in HBsAg- patients with chronic liver disease for the early diagnosis of hepatocellular carcinoma than in HBsAg+ patients.