The management of both compensated and decompensated cirrhosis caused by hepatitis C must be viewed in the context of the natural history of the disease. The prognosis of compensated cirrhosis caused by hepatitis C is relatively good. In a recent retrospective study, after 5 years of follow-up evaluation, 18% of patients had developed hepatic decompensation and 7% hepatocellular carcinoma. Overall 5-year survival rate was 91%. Treatment with alpha interferon appears to decrease the incidence of hepatocellular carcinoma in patients who achieve a sustained remission. However, on an intention-to-treat basis and after adjustment for differences in clinical and serological features at entry, interferon therapy does not correlate with a reduced incidence of liver cancer or improved survival. Combined analysis of multiple large studies on patients with cirrhosis caused by hepatitis C indicates that current regimens of alpha interferon (3 to 6 million units three times weekly for 6 to 12 months) result in a sustained biochemical response in 9% of patients. The rates of sustained virological responses are less well documented. Virological measurements during therapy show that only 22% of patients become hepatitis C virus (HCV) RNA negative by 4 weeks and, thereafter, there is a high rate of breakthrough. In small studies, the combination of interferon and ribavirin leads to sustained biochemical and virological response rates of 21%, more than twice the rates achieved with interferon alone. The prognosis of decompensated cirrhosis caused by hepatitis C is poor, with a 5-year survival rate of only 50%. The efficacy of interferon in patients with decompensated cirrhosis is not well documented and its use cannot be recommended. In contrast, 5-year survival rates after liver transplantation for cirrhosis caused by hepatitis C is excellent, in the range of 70% to 80%. Recurrence of HCV infection occurs in more than 95% of patients, but in short-term follow-up studies, recurrence of cirrhosis and graft failure occurs in only 10% of patients.