CD4+CD25+ regulatory T cells (Treg) have been shown to maintain immune tolerance against self and foreign Ags, but their role in persistent viral infection has not been well-defined. In this study, we investigated whether and where CD4+CD25+ Treg contribute to the development of chronic hepatitis B (CHB). One hundred twenty-one patients were enrolled, including 16 patients with acute hepatitis B, 76 with CHB, and 29 with chronic severe hepatitis B. We demonstrated that in chronic severe hepatitis B patients, the frequencies of CD4+CD25+ Treg in both PBMC and liver-infiltrating lymphocytes were significantly increased and there was a dramatic increase of FoxP3(+)-cell and inflammatory cell infiltration in the liver compared with healthy controls. In CHB patients, circulating CD4+CD25+ Treg frequency significantly correlates with serum viral load. In acute hepatitis B patients, circulating CD4+CD25+ Treg frequency was initially low and with time, the profile reversed to exhibit an increased number of circulating Treg in the convalescent phase and restored to normal levels upon resolution. In PBMC taken from infected patients, depletion of CD4+CD25+ Treg led to an increase of IFN-gamma production by HBV-Ag-stimulated PBMC. In addition, CD4+CD25+ Treg were capable of suppressing proliferation of autologous PBMC mediated by HBV Ags, which probably reflects the generation of HBV-Ag-specific Treg in circulation and in the liver of HBV-infected patients. Together, our findings suggest that CD4+CD25+ Treg play an active role not only in modulating effectors of immune response to HBV infection, but also in influencing the disease prognosis in patients with hepatitis B.