Interferon alpha (IFN) has been used in the treatment of chronic hepatitis B for approximately 25 years. Predictors of response include high pretreatment serum levels of alanine aminotransferase (ALT), low serum hepatitis B virus (HBV) DNA levels, and infection in adulthood. However, only one third of patients achieve a durable response to a course of IFN therapy. Predictors of nonresponse include normal serum ALT levels, high serum HBV DNA levels, hepatitis B e antigen (HBeAg)-negative infection, childhood infection, and immunosuppression. IFN is contraindicated in patients with decompensated liver disease. In addition, the need for parenteral administration and a significant incidence of difficult-to-tolerate side effects limit the suitability of IFN for long-term therapy. For most patients with chronic hepatitis B, including those infected neonatally and those with HBeAg-negative disease, safe, tolerable, and effective alternatives to IFN are needed.