B7-H1 binding to programmed death-1 may deliver a coinhibitory signal to T cells that is involved in the regulation of T-cell activation and tolerance. B7-H1 plays a key role in dysfunction of dendritic cells (DCs) during chronic HBV infection, but the expression mechanism of B7-H1 remains unclear. One hundred and twenty-nine patients with chronic HBV infection were categorized into either the immune tolerance phase (HBV-IT), the immune clearance phase (HBV-IC), or the inactive carrier phase (HBV-IA). Twenty healthy volunteers were enrolled as controls. Another 16 patients with HBeAg-positive chronic Hepatitis B were enrolled, and entecavir was administrated at 0.5 mg per day for 6 months. The B7-H1 expression level on peripheral DCs was tested by flow cytometry. In vitro, expression levels of B7-H1 and signaling molecules on monocyte-derived DC (MO-DC) induced by recombinant hepatitis B virus C antigen (rhHBcAg) were examined by RT-PCR, flow cytometry, and western blotting, and the apoptosis rate was tested by flow cytometry. The percentages of peripheral DCs and myeloid DCs (mDCs) were decreased and B7-H1 levels were increased in patients compared with controls. Serum HBV-DNA levels were positively correlated with B7-H1 levels on mDCs in patients with HBV-IT. B7-H1 levels on peripheral DCs from patients with chronic hepatitis B decreased after antiviral therapy. In vitro studies demonstrated that the B7-H1 level on MO-DC was upregulated by rhHBcAg, which resulted from the activation of PI3K-AKT, ERK, and P38 signaling pathways, and the percentage of MO-DC was downregulated by rhHBcAg. In addition, rhHBcAg promoted the apoptosis of MO-DC. The data suggest that HBcAg induced B7-H1 upregulation by activating AKT, ERK, and P38 signaling pathways, which inhibited the clearance of HBV-DNA and the reduction of DCs contributed to immune tolerance, which may correlate with apoptosis.