The long-term outcome of treatment with Interferon Alpha 2B with and without Prednisolone priming in children infected perinatally with hepatitis B was reviewed. The group studied included 48 children (aged 2–16 years), who were HBe antigen and hepatitis B DNA positive between 1991 and 1993. Twenty children were randomized to a therapeutic trial at that time, and received Prednisolone in reducing doses for 6 weeks and Interferon for 16 weeks while 22 children were monitored without treatment for 12 months. Fourteen of the untreated group and 6 additional children later received treatment with Interferon alone (n = 20). Eight children for whom treatment was declined were followed long term. Median follow-up was 7.5 years (range 1.5–10.6). There was no significant effect of Interferon therapy on seroconversion with or without Prednisolone at 12 months post-treatment compared to untreated children. On longer term follow-up, the 5-year HBeAg to anti-HBe seroconversion percentages, estimated from Kaplan–Meier curves, were 54% for Prednisolone plus Interferon, 22% for Interferon alone, and 12% for untreated children. The median time to seroconversion was 3.9 years (range 0.4–8.2) and was shortest in those treated with Prednisolone plus Interferon. Children who had elevated hepatic transaminase enzymes prior to treatment or during Prednisolone priming had a better response. In contrast to many European studies, no child cleared HBsAg and produced anti-HBs. Treatment with Prednisolone priming and Interferon, improved both the time and rate of seroconversion compared to no treatment or Interferon alone, suggesting that this combination of drugs might have an immunomodulatory effect. J. Med. Virol. 78:888–895, 2006. © 2006 Wiley-Liss, Inc.