Cells expressing alpha- and gamma-interferon were localized in the liver tissue of patients with chronic hepatitis B by means of light and electron microscopy using monoclonal antibodies. Interferon-positive cells were regularly seen in the infiltrating mononuclear cells, and the number showed a good correlation with the degree of the necroinflammatory activity of the disease. In chronic persistent hepatitis and in normal livers, they were infrequent or virtually absent. alpha-Interferon was shown to be positive in lymphocytes, polymorphonuclear leukocytes and fibroblasts, Kupffer cells and, weakly, in the cytoplasm of a few hepatocytes in cases of active hepatitis, whereas gamma-interferon was demonstrated only in lymphocytes. The expression of human leukocyte class I antigens on hepatocytes showed a close association with the number of interferon-producing cells, but not with the presence of virus particles and HBcAg in liver cells, when studied using electron microscopy and double-labeling. Interferon seems to be an important regulator of the local immune response in the liver in patients with chronic hepatitis B. Its functions may play a role in inducing the human leukocyte class I antigen expression on hepatocytes, thus enhancing the elimination of virus-containing hepatocytes by major histocompatibility complex-restricted cytotoxic lymphocytes.