Four hundred and eighty‐two unvaccinated children from three different age groups (12‐18 months, 30‐42 months, 54‐115 months) in a hepatitis B virUs (HBY) endemicareawere tested for markers of HBV infection. HBVseromarkers were detected in 52.3% of children and 26.9% were hepatitis B surface antigen (HBsAg)positive. Evidence of infection was related to age, with HBV sero marker rates highest (67.5%) in school children aged 56‐115 months. The HBsA.g positive rate was highest (30.1%) in children 30‐42 months of age. However, even children in' the youngest age group (12‐18 months) had high sero marker (26.8%) and HBsAg positive (17.0%) rates. A high proportion of HBsAg positive children (83.8%) were also hepatitis Be antigen (HBeAg) positive. Mothers of children in the youngest age group (12‐18 months) were also tested, and 24.5% were HBsAg positive. Factors associated with higher rates of infection in children included maternal HBeAgpositivity (for children In the youngest age group), increasing age, and residence on the Islands of Emao or Nguna. Higher rates of HBsAg positivity were associated with these factors and with being male. Crossinfection between children is probably the most important source of infection, based on the evidence of the high rate of HBeAg positivity in children and the rising infection rate with age. A possible vehicle of spread is through skin Infections and skin sores which are highly prevalent In children in Vanuatu. Since this study Indicates that both perinatal and early child‐to‐child transmission are occurring, the most practical strategy to prevent the majority of infections is to vaccinate all children, commencing at birth and completing the course early in the first year of life.