The number of patients treated with interferon (IFN) has increased markedly in Japan since 1992, when the Health and Welfare Ministry approved the use of IFN for treating chronic active hepatitis C. It is important to identify and treat depression, which is one of the psychiatric complications of IFN therapy and often leads to discontinuation of the therapy, in patients with chronic hepatitis C. In this study we prospectively investigated the incidence of depression during IFN therapy in patients with chronic active hepatitis C. The psychiatric status of 85 patients (53 men, 32 women; mean age 49.1 years) with chronic active hepatitis C who began receiving IFN at Showa University Hospital was assessed before and 2, 4, 12 and 24 weeks after the start of IFN therapy, using the major depressive episode diagnostic criteria listed in the DSM-III-R and the Hamilton Depression Scale HDS). All of the patients provided informed consent prior to participation in this study. IFN therapy was discontinued in 5 cases (5.9%) because of physical side effects and in 4 cases (4.7%) because of depression. Two, 11, 14, 25 and 16 patients were diagnosed as having major depressive episodes before and 2, 4, 12 and 24 weeks after the start of IFN therapy, respectively. The number of patients who were asymptomatic before the start of IFN therapy but were diagnosed as having a major depressive episode at least once during IFN therapy was 31 (31/83 = 37.3%). The mean HDS scores at 2, 4, 12 and 24 weeks (5.4, 6.0, 8.8 and 6.6) were significantly higher than that before the start of IFN therapy (3.0). The patients whose first diagnosed major depressive episodes occurred more than 4 weeks after the start of IFN therapy tended to be more severely depressed than those in whom it occurred less than 4 weeks after the start of IFN therapy. Compared to the 47 patients who completed 24 weeks of IFN therapy without experiencing depression, the 31 patients who were diagnosed as experiencing major depressive episodes during IFN therapy had significantly higher neuroticism scores determined using the Eysenck Personality Questionnaire, showed a more severely depressed mood and experienced more severe sleep disturbances before the start of IFN therapy. The latter group of patients also tended to have comorbid chronic physical disorders such as hypertension or diabetes mellitus and the histories of mental disorders before the IFN therapy; however these differences were not statistically significant. There were no differences between the two groups in patient age or sex, the severity of hepatitis before the IFN therapy, the type of IFN used in the therapy or the efficacy of IFN in the treatment of the hepatitis C. Our results indicate that the decision as to whether to treat chronic active hepatitis C with IFN should be made carefully and that early intervention and careful monitoring of depression are required during IFN therapy in the treatment of chronic active hepatitis C.