We prospectively studied the effect of carbamazepine (CBZ) therapy on serum lipids and liver function tests in 28 patients and 28 age and sex matched controls. The mean age of patients was 8.29 years, duration of therapy with CBZ 10.3 months and dose of CBZ 13.1 mg/dL. The patients and controls were comparable in weight, height and BMI. Mean +/- SD of cholesterol 162 +/- 25.8 mg/dL in patients was significantly more than controls 131+/- 25.2 mg/dL. Mean LDL cholesterol and HDL cholesterol were also significantly raised in patients. Values of mean VLDL, triglycerides, ratio of LDL HDL, TC HDLC bilirubin and SGPT were not significantly different in two groups. Blood Levels of alkaline phosphatase were significantly more in patients compared to controls. The long term implications of these findings need to be studied.