Evolution of hepatitis C quasispecies may be one mechanism by which fibrosing cholestatic hepatitis develops after liver transplantation. In this study, we compared changes in quasispecies complexity and/or divergence in (1) hepatitis C-infected immunosuppressed transplant recipients and in immunocompetent controls; (2) transplant recipients with mild recurrence, and in those with the most severe form of posttransplantation recurrence. Quasispecies were measured in 12 hepatitis C-infected patients pretransplantation and posttransplantation (6 with mild and 6 with severe recurrence), and in 5 immunocompetent patients with similar follow-up, and characterized by heteroduplex mobility and sequence analysis of the hypervariable region. Although the number of variants (complexity) did not change with time in either group, there was a qualitative change in the variants with time (divergence) in immunocompromised, but not in immunocompetent patients. These changes were most marked with severe recurrence, and preceded the development of severe disease. Phylogenetic analysis confirmed that most posttransplantation variants were unrelated to those detected pretransplantation. These observations suggest that in the absence of immune suppression, there is minor evolution of quasispecies. With immune suppression, divergence of quasispecies is enhanced, resulting in selection/emergence of many new variants, particularly in those with fibrosing cholestatic hepatitis. Thus, quasispecies may influence disease progression in immune suppressed populations.