Adefovir dipivoxil (ADV) is esterolytically cleaved to the 2′-deoxyadenosine monophosphate (dAMP) analog adefovir, subsequent phosphorylation leads to the formation of the anti-Hepatitis B virus (HBV) agent adefovir-DP. To better understand the mechanism of action of ADV, metabolism studies were done in Hep G2, Huh-7 and primary human hepatocytes. Separation of radiolabeled adefovir metabolites after incubation in Hep G2 cells suggested that adefovir in its mono- and di-phosphorylated forms are the only metabolites formed from adefovir. Incubation of 10 μM adefovir with hepatic cell lines and fresh monolayers of primary human hepatocytes from two donors and analysis of intracellular metabolites by liquid chromatography coupled to tandem mass sepctrometery resulted in adefovir-DP levels of approximately 10 pmol/million cells. Adefovir was more efficiently phosphorylated in primary hepatocytes than cell lines with adefovir-DP accounting for 44% versus 26% of total intracellular adefovir after 24 h. Egress studies showed adefovir-DP to have a half-life of 33 ± 3 h, 10 ± 1 h, 48 ± 3 h and 33 ± 2 h in Hep G2, Huh-7, and primary hepatocytes from two separate donors, respectively. The markedly shorter half-life in Huh-7 cells was inferred to be transport dependent based on its sensitivity to the transport inhibitor MK-571. Effective phosphorylation coupled with a long intracellular half-life and small competing dATP pool sizes in primary hepatocytes forms the cellular metabolic basis for the efficacy of adefovir dipivoxil in the treatment of chronic hepatitis B.