Aliment Pharmacol Ther 2011; 34: 353–362 Summary Background  Transient elastography has gained popularity to stage liver fibrosis in chronic viral hepatitis, however, diagnostic cut‐offs for severe fibrosis in chronic hepatitis B are poorly defined. Aim  To evaluate an algorithm with two distinct cut‐offs for positive and negative prediction of significant fibrosis and cirrhosis in chronic hepatitis B patients. Methods  Two cohorts of treatment‐naïve patients with chronic hepatitis B (125 training and 92 validations) were consecutively and concurrently examined by percutaneous liver biopsy and transient elastography. Fibrosis was staged by Metavir (significant fibrosis = F ≥ 2; cirrhosis = F4) in ≥2 cm long liver tissue cores. Results  A >13.1 kPa positive and a ≤9.4 kPa negative cut‐off for cirrhosis had a >90% sensitivity and specificity, with an accuracy of 94%. The corresponding cut‐offs for F ≥ 2 were >9.4 and ≤6.2 kPa, thus classifying 56% of patients with an overall accuracy of 90%. In the validation cohort, F4 and F ≥ 2 were predicted by the above transient elastography cut‐offs with an overall accuracy >90%. In 165 patients with higher than upper limit of normal transaminase activity the dual cut‐off algorithm of transient elastography was as accurate as in the 52 patients with normal alanine aminotransferase values in the prediction and exclusion of cirrhosis, only. Conclusions  A dual cut‐off algorithm allowed for correctly classifying both significant fibrosis and cirrhosis in the majority of the patients with chronic hepatitis B, independent of alanine aminotransferase values, thus reducing the need for liver biopsy investigations.