The emergence of drug-resistant virus in hepatitis B virus patients treated with lamivudine is well documented. However, its clinical impact in the long-term treatment of anti-HBe positive compensated cirrhotic patients is not well known. In this study, we treated 22 consecutive patients with anti-HBe compensated cirrhosis with lamivudine for a median period of 42 months. All patients responded to lamivudine, but viral breakthrough occurred in 13 patients (59%) between 9 and 42 months of therapy due to the emergence of a mutant strain. During the follow-up, 11 developed hepatocellular carcinoma. Of these, 10 occurred soon after the emergence of viral resistance, generally showing aggressive behaviour, and one in the nine long-term responder patients (P = 0.013). Lamivudine resistance was the only independent predictor of hepatocellular carcinoma development (risk ratio: 10.4; 95% CI: 1.3-84.9). Our study suggests that the occurrence of lamivudine resistance increases the risk of hepatocellular carcinoma in anti-HBe positive cirrhosis and warrants further research.