To examine the effects of interferon (IFN) therapy on clinical, biochemical, and histological features in patients with compensated hepatitis C virus (HCV)-related cirrhosis, we have conducted a randomized, controlled trial of IFN therapy versus observation. Eight centers included a total of 99 patients with biopsy-proven cirrhosis. IFN-α2b, 3 million units three times per week, or no antiviral therapy was given for 48 weeks. Twenty-three patients dropped out. End-of-treatment biochemical response was not observed in any of the 39 controls but was observed in 6 of the 47 treated patients (P < .02); sustained biochemical response was obtained in only 2 treated patients. Controls and treated patients did not significantly differ with regard to the changes in serum level of albumin, bilirubin, α-fetoprotein, in plasma prothrombin, in histological activity, or liver collagen content. During trial or follow-up (160 ± 57 weeks), hepatocellular carcinoma developed in 9 controls and 5 treated patients (NS); decompensation of cirrhosis occurred in 5 controls and 7 treated patients. Seven controls and 10 treated patients died. In conclusion, in patients with compensated HCV-related cirrhosis, a 48-week course of IFN therapy is safe and is able to induce end-of-treatment biochemical response in a significant proportion of patients. However, a 48-week course of IFN therapy usually fails to achieve sustained response and, within the limit of this study, did not significantly improve the 3-year outcome. Therefore, a longer course of IFN therapy or combination therapy with ribavirin should be evaluated in patients with HCV-related cirrhosis.