Common adverse effects of IFN-alpha include flulike symptoms, headache, irritability, and bone marrow suppression. Hepatic side effects are unusual except in patients with pretreatment autoimmune hepatitis. Granuloma formation in the liver as a result of IFN-alpha therapy has never been reported. We described a 48-year-old female with chronic hepatitis C infection who developed granulomatous hepatitis following treatment with IFN-alpha. The granulomatous inflammation resolved after discontinuation of IFN-alpha treatment. Possible mechanisms for this unusual occurrence are discussed.