Over 4 million people in the United States are chronically infected with hepatitis C virus (HCV), and, if untreated, over 20% of these will progress to more serious disease. Persons with severe mental illness (SMI) have markedly elevated rates of HCV infection, but treatment of persons with SMI and HCV has been controversial. Effective antiviral treatment is available, but side effects include depression and other neuropsychiatric symptoms. This article reviews the available data on neuropsychiatric side effects of interferon (IFN) treatment, discusses the limitations of the current research, and makes recommendations regarding HCV treatment in persons with SMI.