Vertical transmission implies transmission of the hepatitis B virus from mother to infant. This occurs with great frequency (70 to 100 per cent) when the mother has acute hepatitis B near delivery. Studies indicate that transmission may occur transplacentally or during the birth process. Once infected, the infants apparently remain hepatitis B surface antigen carriers with persistent hepatitis indefinitely. The rate of transmission of the hepatitis B surface antigen from asymptomatic carrier mothers to their infants varies from 0 to 40 per cent in different areas of the world. The highest rate is in Taiwan where it was found that neonatal infection correlated with the height of complement fixation of surface antigen in the maternal serum. In our series of carrier mother-infant pairs, three infants became surface antigen positive as neonates; two became positive between three and six months; and one became positive between six and 12 months of age. Two babies developed extremely high titers of antibody to hepatitis B surface antigen the first year of life. In addition, 33 infants who were followed for from three to 42 months developed neither antigen nor antibody positivity.