Interferon is the most promising therapeutic agent for the treatment of chronic viral hepatitis. The results of studies suggest that corticosteroid pretreatment may improve the response rate. Twenty-nine children with chronic hepatitis B (CHB) were randomly assigned to receive recombinant interferon alpha (rIFN-alpha) alone (Group 1.5 million units/m2 body surface, 3 times a week for 24 weeks) or to receive oral prednisone (Group 2.2 mg/kg/day for 3 weeks, discontinued by tapering the dose within 1 week) followed by rIFN-alpha (same dose as above). Tests for liver function and hepatitis B virus (HBV) markers including HBV-DNA were done periodically. Overall, 10 patients (34.5%) cleared hepatitis Be antigen and 13 (44.8%) HBV-DNA. Anti-HBe seroconversion was observed in nine patients (31%). Only three patients (10.3%) cleared hepatitis B surface antigen and seroconverted to anti-HBs. No response was obtained in 11 patients (37.9%). There was no statistically significant difference between the two treatment groups regarding response rate. Baseline transaminases levels and HBV-DNA concentrations were predictive parameters for HBeAg clearance. It is concluded that prednisone pretreatment does not have a beneficial effect in children with CHB.