Hepatitis C virus (HCV)-specific cytotoxic T lymphocytes (CTL) have been shown to play a role in host defense and pathogenesis of chronic HCV infection. Our aim was to test the hypothesis that intrahepatic HCV-specific CTL activity may impact subsequent response to interferon alfa (IFN-α) therapy. Of the 37 patients that we have prospectively evaluated for HCV-specific CTL activity in liver, 21 received IFN therapy, and 19 completed a 6-month course and attended 6 to 18 months of follow-up. Intrahepatic CD8+ cells were isolated from liver biopsy tissue and tested against target cells expressing HCV antigens to determine intrahepatic CTL activity. The relationship between treatment response and HCV-specific CTL activity and other factors known to associate with response (genotype, viremia, histology) was analyzed. HCV-specific CTL activity was detected in 9 of 21 patients (and 9 of 19 who completed therapy). After 6 months of IFN therapy, 8 of 19 (42%) patients had normal serum alanine transaminase (ALT) (complete responders). After 18 months of follow-up, only 3 patients (16%) had a sustained biochemical response. Of the 9 patients with detectable HCV-specific CTL activity in their liver before treatment, 7 (78%) developed a complete response. In contrast, only 1 of the 10 patients with no detectable HCV-specific CTL activity developed a complete response to IFN (P < .01). In 6 of 8 patients with a complete response, including the 3 sustained responders, the CTL response appeared to be directed predominately to the HCV core region. These data suggest that the host immune response, particularly that mediated by CD8+ CTL, may be important in determining the outcome of IFN therapy for chronic HCV infection. Further understanding of the mechanism of action of IFN should impact the design of better therapeutic strategies against chronic HCV infection.