To examine the long-term effect of interferon (IFN) therapy in patients with chronic hepatitis B virus (HBV) infection, particularly on survival and hepatocellular carcinoma (HCC) prevention, 101 male patients with chronic hepatitis B in a randomized controlled trial were followed up for 1.1 to 11.5 years after the end of therapy. Of the 101 patients, 34 patients received a placebo (control), and 67 patients were treated with IFN (31 patients were treated with IFN alone and 36 patients were treated with IFN after prednisolone priming). Follow-up studies included clinical, biochemical, and virological aspects and HCC screening every 3 to 6 months. Twenty-eight (42%) of the 67 IFN-treated patients and 8 (24%) of the 34 untreated patients seroconverted by the end of the trial. During follow-up, 22 (56%) of the 39 patients who did not seroconvert in the treated group and 5 (19%) of the 26 patients who did not seroconvert in the control group showed a delayed sustained response (P <.005). The cumulative incidence of sustained response was highest in the steroid priming group (P =.049 vs. the IFN-alone group; P =.028 vs. the control group). HCC was detected in 1 (1.5%) of the 67 treated patients and 4 (12%) of the 34 untreated patients (P =.043). The interval between entry and HCC detection was 3.5 to 8.2 years. The cumulative incidence of HCC development was significantly higher in the control group than in the treated group (P =.013). In contrast, the cumulative survival rate was higher in the treated group than the control group (P =. 018). Multivariate analysis showed that IFN therapy, preexisting cirrhosis, and the patient's age at entry are significant independent factors for both survival and HCC development. The results suggest that IFN has long-term beneficial effects in terms of HBV clearance, reduction of HCC, and prolonging survival.