The efficacy of interferon treatment for Australian patients with chronic active hepatitis B (CAH-B) was assessed by a three-centre randomised controlled trial in Sydney and Brisbane. Thirty patients (29 with histologically-proven CAH-B with and without cirrhosis and one with chronic persistent hepatitis) were allocated to receive either thrice weekly intramuscular injections of recombinant human leucocyte interferon -alpha A (either 2.5, 5.0 or 10.0 million units/m2) for six months followed by 12 months of observation, or to be observed for 18 months without active treatment. Three of 23 treated patients but none of seven controls underwent clinical, biochemical and histological resolution of their disease with loss of HBsAg, HBeAg and HBV-DNA from serum. An additional six treated and two control patients underwent a sustained partial remission of their disease. This was characterised by resolution of symptoms and serum aminotransferase abnormalities in association with seroconversion from HBeAg positive to negative, loss of HBV-DNA from serum but persistent hepatitis B surface antigenaemia. In such patients, there was significant improvement in histological appearances but some necroinflammatory activity remained and fibrosis was unchanged. Although total response rates were similar in treated and control subjects, they appeared to occur earlier after interferon treatment. Treatment with interferon was associated with predictable but minor side effects that usually did not necessitate dose reduction and rarely compromised the patient's life style. Interferon is thus a feasible treatment for CAH-B. Complete responses occurred only in treated patients and partial responses appeared to occur earlier in treated than in untreated patients. However, differences in the partial response rate at 18 months were not significant and seroconversion from HBeAg positive to negative was not associated with complete histological resolution of disease activity. Hence, while interferon is a promising agent for treatment of CAH-B, efforts must continue to define more optimal treatment regimes and to identify those patients most likely to respond to this agent.