Although IFN-alpha forms the foundation of therapy for chronic hepatitis C, only a minority of patients has a sustained response to IFN-alpha alone. The antiviral activities of IFN-alpha formed the rationale for its use in viral hepatitis. However, IFN-alpha and the other Type I IFNs are also pleiotropic immune regulators. Type I IFNs can promote IFN-gamma production by activating STAT4 but can also inhibit production of IL-12, a potent activator of STAT4 and IFN-gamma production. The efficacy of IFN-alpha in the treatment of hepatitis C may therefore depend in part on the balance of IFN-gamma-inducing and IL-12-suppressing effects. We characterized the effects of pegylated IFN-alpha therapy for hepatitis C on the capacity of patients' PBMC to produce IL-12 and IFN-gamma ex vivo. Cells from patients with a sustained virological response to therapy had significantly greater levels of IFN-alpha-driven IFN-gamma production prior to treatment than those from nonresponding patients. No differences in pretreatment IL-12 productive capacity were seen between patient groups. However, therapy with IFN-alpha led to suppression of inducible IL-12 production throughout the course of therapy in both groups of patients.