The effect of a short course of prednisone therapy on serum IgM type antibody to the hepatitis B core antigen (anti-HBc IgM) was studied in 14 male patients with chronic active type B hepatitis. Eleven patients (78.5%) became positive for serum anti-HBc IgM either during or shortly after prednisone withdrawal. Detection of anti-HBc IgM correlated with an increase in hepatitis B virus specific DNA-polymerase activity and was followed by a rise in serum transaminase levels. Six patients with histologic evidence of cirrhosis developed anti-HBc IgM which lasted six or more months after prednisone therapy and had a rapid onset of hepatic decompensation manifested by encephalopathy with ascites and/or variceal bleeding. In 17 untreated chronic active type B hepatitis patients who served as controls, anti-HBc IgM was detected at low levels in only a single serum sample from each of two patients during the same observation period.