The effect of prolonged alpha-interferon therapy on immune function was studied in patients with chronic type B hepatitis. These patients with chronic type B hepatitis have been shown to have a defect in their in vitro response to human recombinant alpha-interferon. This defect consists of a failure to augment pokeweed mitogen-stimulated immunoglobulin production at low concentrations of interferon and an increased susceptibility to the suppressive effects of interferon. After 2 weeks therapy with interferon, immunoglobulin production was further suppressed. However, after 4 months of therapy with interferon, pokeweed mitogen-stimulated immunoglobulin production partially returned towards the pretreatment values. Antibody to hepatitis B core antigen was less affected by interferon therapy. This altered response to interferon was not specific as it was seen in some patients with other forms of liver disease. The suppression of B cell differentiation appears to be separate from its antiviral and antiproliferative effects.