Ursodeoxycholic acid (UDCA) has been shown to have beneficial effects on patients with primary biliary cirrhosis, suggesting that UDCA has immunomodulating effects. We investigated the effect of UDCA in patients with autoimmune hepatitis (AIH) which is characterized by immunological abnormalities. Eight patients with type 1 AIH were treated with 600 mg of UDCA per day for 2 years. Based on the criteria of the International Autoimmune Hepatitis Group, five patients were diagnosed as definite and three as probable type 1 AIH. Liver function tests were performed every 4 weeks, before and during UDCA therapy and the serum levels of anti-nuclear antibodies (ANA), smooth muscle antibodies (SMA), immunoglobulin G and gamma globulin were determined every 3 months. The levels of serum aspartate aminotransferase and alanine aminotransferase significantly decreased from 154 ± 24 IU/L and 170 ± 17 IU/L before UDCA therapy to 31 ± 3 IU/L and 25 ± 5 IU/L (P < 0.001) after 1 year of treatment and 28 ± 2 IU/L and 23 ± 4 IU/L (P < 0.001) after 2 years of treatment. After 2 years of treatment, the levels of serum immunoglobulin G and gamma globulin significantly decreased (P < 0.05) and ANA titres (5/8 patients) were reduced and SMA (3/5. patients) became negative. Furthermore, hepatic histopathological changes of four patients were assessed after 1 year of treatment, and an improvement of intrahepatic inflammation, but not fibrosis, was observed. In conclusion, these results suggest that UDCA has a beneficial therapeutic effect in patients with type 1 autoimmune hepatitis.