Hepatitis B virus (HBV) covalently closed circular DNA (cccDNA) is responsible for persistent infection of hepatocytes. The aim of this study was to determine changes in intrahepatic cccDNA in patients with chronic hepatitis B (CH‐B) during 48 weeks of antiviral therapy and its correlation to virological, biochemical, and histological parameters. Twenty‐six HBsAg‐positive CH‐B patients received combination treatment with pegylated interferon alpha‐2b (peg‐IFN) and adefovir dipivoxil (ADV) for 48 weeks. Paired liver biopsies from before and at the end of treatment were analyzed for intrahepatic HBV‐DNA. Median serum HBV‐DNA had decreased by −4.9 log₁₀ copies/mL at the end of treatment and was undetectable in 13 individuals (54%). Median intrahepatic total HBV‐DNA and cccDNA had decreased by −2.2 and −2.4 log₁₀, respectively. Changes in intracellular HBV‐DNA positively correlated with HBsAg serum reduction and were accompanied by a high number of serological responders. Eight of 15 HBeAg‐positive patients lost HBeAg, and five developed anti‐HBe antibodies during treatment. These eight patients exhibited lower cccDNA levels before and at the end of therapy than did patients without HBeAg loss. Four patients developed anti‐HBs antibodies. ALT normalized in 11 patients. The number of HBs‐antigen‐ and HBc‐antigen‐positive hepatocytes was significantly lower after treatment, suggesting the involvement of cytolytic mechanisms. In conclusion, combination therapy with peg‐IFN and ADV led to marked decreases in serum HBV‐DNA and intrahepatic cccDNA, which was significantly correlated with reduced HBsAg. (HEPATOLOGY 2006;44:675–684.)