Dose-dependent, reversible neuropsychiatric toxicity is reported in up to 30-40% of chronic hepatitis C patients treated with 6-12 months of interferon-alpha or interferon-alpha plus ribavirin combination therapy. Although risk factors remain poorly defined, neuropsychiatric side effects may be severe and dose-limiting in as many as 10-20% of treated patients. Diagnosis relies upon the detection of clinically apparent neuropsychiatric symptoms and the emerging use of self-administered mood inventories and questionnaires. The current stepwise approach to management includes evaluation and treatment of systemic side effects, early use of adjuvant medications, and interferon-alpha and ribavirin dose reduction or cessation with psychiatric referral in selected cases. Although the cellular basis of the neuropsychiatric toxicity of interferon-alpha remains unknown, several hypothesis involving changes in central adrenergic, seratonergic, opioid and neuroendocrine pathways have been proposed. Recognition and management of the neuropsychiatric side effects of antiviral therapy will be of growing clinical importance as additional patients with chronic hepatitis C are treated and longer durations of therapy are utilized.