The treatment of chronic hepatitis C is currently based on a combination of pegylated interferon (IFN)-alpha and ribavirin. When successful, this treatment leads to sustained HCV clearance which, in virtually all cases, signifies viral eradication. However, approximately 20% of patients with hepatitis C virus (HCV) genotype 2 or 3 infection, and 50% of patients with genotype 1 infection, fail to eradicate the virus. The risk of treatment failure is related to multiple factors, including the treatment schedule, adherence of therapy, host factors, and the severity of HCV-associated disease. Viral factors can also lead to true "HCV resistance". The mechanisms underlying this resistance are unknown, but indirect evidence suggests that chronic infection is associated with phenomena that protect HCV from the antiviral action of IFN-alpha and hinder the clearance of infected cells. This article discusses current knowledge of the mechanisms of action of IFN-alpha and ribavirin, the virological characteristics of chronic hepatitis C treatment success and failure, and possible underlying mechanisms.