A cohort of patients with chronic type B hepatitis is being evaluated and followed to determine the long-term natural history of this common form of chronic liver disease. Selected patients have been entered into therapeutic trials of antiviral and/or immunomodulatory agents. Efforts are now being directed towards improving the therapeutic response rate to alpha interferon alone. Two studies using alpha interferon as therapy for chronic type B hepatitis are underway. The first is a randomized, controlled trial to reevaluate the effects of alpha interferon alone (at a dose of 10 million units three times weekly) compared to no therapy. Forty four patients have been entered into this study and 11 have now been treated with interferon and completed follow up (total 6 mos.). Among these patients, 5 (45%) cleared HBeAg from serum, 2 had a partial response with loss of DNA polymerase activity from serum but no clearance of HBeAg and the remaining 4 patients showed only a temporary partial inhibition of DNA polymerase activity in serum. The disease in controls did not improve. A second study is designed for patients who have not responded to interferon alone in previous studies. In these cases, the effect of pretreatment with a 4 week course of prednisone before administration of interferon is being evaluated. It is hoped that the immunostimulatory effects of rapid withdrawal of corticosteroids, by inducing an exacerbation of hepatitis activity will tend to optimize the antiviral effects of alpha interferon. Nine patients have been entered into this study so far, and all have completed the treatment regimen. Only one patient has responded with clearance of HBeAg and HBsAg from serum.