OBJECTIVE Treatment of chronic hepatitis B with interferon alfa is not approved in children. The aim of this study was to evaluate the safety and efficacy of interferon alfa (IFN-alpha) in children with chronic hepatitis B and increased transaminase levels. METHODS Children were given either IFN-alpha2b (6 megaunits/m2 thrice weekly for 24 weeks) or no treatment. Clearance of markers of viral replication was evaluated 24 weeks after therapy and after 48 weeks of observation in controls. RESULTS Of 149 children enrolled, 144 were evaluable (70 treated and 74 controls). Serum hepatitis B e antigen and viral DNA became negative in 26% of treated children and 11% of controls (P < 0.05). Serum aminotransferase levels normalized and liver histology improved among responders. Hepatitis B surface antigen became undetectable in 10% of treated patients and 1% of controls. Female gender and interferon treatment were the only significant predictors of response. Ethnic origin, baseline aminotransferase level, initial DNA levels, and histology did not correlate with response. Most adverse reactions were mild or moderate, and dose was reduced in 24% of children. CONCLUSIONS In children with chronic hepatitis B, INF-alpha promotes loss of viral replication markers and surface antigen and improves aminotransferases and histology.