Clinical recurrence of hepatitis C after liver transplantation can lead to cirrhosis, liver failure, and death. In patients undergoing liver transplantation for hepatitis C, we assessed the efficacy of interferon alfa- 2b (IFN) in preventing recurrent hepatitis. We randomized 86 patients to either an IFN group (3 MU three times a week starting within 2 weeks after transplantation and continued for 1 year) or a control (no IFN) group. Recurrence, the primary end point, was diagnosed on biopsy performed at 1 year or for abnormal biochemistries, HCV RNA levels were measured by branched-chain DNA (bcDNA) assay and arbitrarily defined as low, moderate, or high (<10 x 105, 10-100 x 105, or > 100 x 105 Eq/mL, respectively). Data on 30 IFN patients and 41 no-IFN patients who survived ≤3 months were reviewed. Mean follow-up was 669 ± 228 days for IFN patients and 594 ± 254 days for no-IFN patients. IFN patients were less likely to develop recurrent hepatitis (8 IFN vs. 22 no-IFN patients, P = .017, log rank analysis). IFN and 1-month HCV RNA level were independent predictors of recurrence. IFN reduced the risk of recurrence by a factor of 0.4 (P = .04, Cox proportional hazards model); HCV RNA level >100 x 105 Eq/mL at 1 month after transplantation increased the risk by a factor of 3.1 (P = .01). Low, moderate, and high viral levels at 1 and 3 months were associated with significantly different rates of recurrence in IFN patients (P = .05 at 1 month and P = .003 at 3 months) but not in untreated patients (P = .28 at 1 month and P = .25 at 3 months). In patients with two or more rejections, the risk of recurrence was increased by a factor of 2.17 (P = .05). On 47 1-year biopsies (24 IFN; 23 no IFN), piecemeal necrosis was more common in untreated patients (P < .02). One- and 2-year patient survival, respectively, was 96% and 96% with IFN and 91.2% and 87.2% without (P = NS). Prophylactic IFN reduced the incidence of recurrent hepatitis after transplant. Although IFN was most effective in patients with low HCV RNA levels, we also noted an effect in patients with moderate levels. IFN did not prevent viremia, suggesting that it may work through alternative mechanisms.