Nephrotic syndrome developed in two children who carried hepatitis B virus. Both their serums contained hepatitis B surface antigen and hepatitis B e antigen (HBeAg). Two physicochemically and immunologically different categories of HBeAg activity were identified in their serums--i.e., small molecular (free) and large molecular (associated with IgG). Their kidney-biopsy specimens disclosed pathologic changes typical of membranous glomerulonephritis. By a fluorescent-antibody technic, HBeAg was found to be deposited in diffuse granular fashion, along glomerular capillary walls together with IgG and beta1C, but no deposition of hepatitis B surface antigen was detected. The presence of HBeAg in association with IgG both in the serum and in the kidneys of these patients suggests that HBeAg caused membranous glomerulonephritis by inducing the formation and deposition of immune complexes.