Concomitant non-alcoholic fatty liver disease is common in patients with chronic hepatitis B (CHB) infection, although its impact on liver-related outcomes remains controversial. We aimed to study the effect of hepatic steatosis on risk of fibrosis progression and hepatitis B surface antigen (HBsAg) seroclearance.Treatment-naive CHB patients with normal alanine aminotransferase and low viremia (serum HBV DNA <2000 IU/mL) were prospectively recruited for baseline and 3-year transient elastography assessment. Fibrosis staging was defined according to the EASL-ALEH guidelines, with fibrosis progression defined as ≥1 stage increment of fibrosis. Hepatic steatosis and severe hepatic steatosis were defined as controlled attenuation parameter (CAP) ≥248 dB/m & ≥280 dB/m respectively.330 patients (median age 50.5 years, 41.2% male, median HBV DNA 189 IU/mL) were recruited. Twenty-two patients (6.7%) achieved HBsAg seroclearance during follow-up, and the presence of hepatic steatosis was associated with significantly higher chance of HBsAg seroclearance (hazard ratio: 3.246, 95%CI 1.278-8.243, p=0.013). At baseline, 48.8% and 28.8% had steatosis and severe steatosis, respectively. 4.2% had F3/F4 at baseline, which increased to 8.7% at 3 years. The rate of liver fibrosis progression in patients with persistent severe steatosis was higher than those without steatosis (41.3% vs. 23%, p=0.05). Persistent severe hepatic steatosis was independently associated with fibrosis progression (odds ratio: 2.379, 95%CI 1.231-4.597, p=0.01).CAP measurements have predictive values in virologically quiescent CHB patients. Presence of hepatic steatosis was associated with a higher risk of fibrosis progression but paradoxically a 3-fold increase in HBsAg seroclearance rate.