The natural history, prognosis, and clinical significance of chronic hepatitis C are highly variable and somewhat controversial. The purpose of this study was to evaluate the effect of chronic hepatitis C infection on patients' perceptions of health-related quality of life (HRQOL) and to evaluate whether treatment with interferon improves HRQOL. A total of 642 patients with compensated liver disease who were enrolled in a multicenter trial of interferon therapy for chronic hepatitis C had evaluation of HRQOL using the SF-36 and other instruments derived from the Medical Outcomes Study (MOS). These instruments were self-administered by patients at baseline and at the end of a 24-week post-treatment observation period after 24 weeks of interferon treatment. Patients with chronic hepatitis C were compared with healthy controls (n = 750) selected from a representative sample of adults in the United States. Unadjusted and age/gender-adjusted results were similar, as were analyses using parametric or nonparametric methods. Compared with healthy controls, patients with chronic hepatitis C at baseline had lower HRQOL on all eight scales of the SF-36 (P <.001 for all). Patients without cirrhosis (n = 284 ) showed similar although slightly smaller differences. The differences were highly significant, clinically and socially relevant, and greatest for those scales that were more reflective of physical than mental or emotional disease. Patients who had a sustained viral response to interferon therapy (n = 41) exhibited marked improvements in HRQOL, and these improvements exceeded those of nonresponders on 13 of 14 HRQOL scales (8 were statistically significant). Similar improvements were noted in patients with sustained biochemical responses. The authors concluded that patients with chronic hepatitis C with or without cirrhosis have markedly reduced HRQOL. Patients who had a sustained response (virological or biochemical) to interferon therapy experienced significant improvements in perceived wellness and functional status. Successful interferon therapy provides meaningful improvements in HRQOL in patients with chronic hepatitis C.