BACKGROUND: Large population-based cohort studies in areas of high hepatitis B virus (HBV) prevalence have provided the evidence establishing hepatitis B surface antigen (HBsAg) carriage as a risk factor for hepatocellular carcinoma (HCC) and liver disease. Fewer studies have examined this in Western countries, where both HBV infection and carriage are less common and transmission patterns differ. This is the only prospective population-based study to examine this relationship in Europe. METHODS: In all, 2681 male and 977 female blood donors in England and Wales, found to be HBsAg positive during routine blood-donation screening, were followed up from recruitment in 1970-1982 to December 1999 and their cause-specific mortality was analysed. This was compared with that of the general population of England and Wales. RESULTS: During a mean of 22 years of follow-up, 17.4% of the 420 deaths were due to HCC or liver disease. There were 20 deaths from HCC in male HBsAg carriers, representing a significantly high standardized mortality ratio (SMR) compared to the male population of England and Wales of 26 (SMR = 26.26; 95% CI: 16.04- 40.54). The HCC incidence rate in males was 33.5 per 100 000 person years and 4.4 per 100 000 person years in females. Men had 8.5 (SMR = 8.50; 95% CI: 6.25- 11.31) and women had 3.9 times the risk of death from liver disease (SMR = 3.89; 95% CI: 1.26-9.09). The risk of circulatory disease deaths was reduced in both males and females. There was a significant increased risk of non-Hodgkins lymphoma that was not apparent in the first decade of follow-up. The increased risk of HCC and liver disease in men fell with follow-up. CONCLUSION: Hepatitis B surface antigen carriage is a significant risk factor in England and Wales for both liver disease and HCC mortality. However, this risk has declined with duration of follow-up. This could be due to natural reversion to HBsAg negativity or as a result of treatment and avoidance of other risk factors. The increased risk of non-Hodgkins lymphoma seen in longer follow-up is likely to be related to HIV infection acquired subsequent to recruitment.