Prognosis of hepatitis C is determined primarily by the extent and progression of fibrosis. Fibrosis, or the accumulation of extracellular matrix, is reversible, whereas cirrhosis is not. A large-scale clinical trial showed that extensive fibrosis may go undetected with little or no clinical signs or symptoms. The mean interval from time of infection to development of cirrhosis was approximately 30 years, although cirrhosis may occur in as little as 10 to 15 years or more than 50 years. Viral factors, including genotype and viral RNA levels, predict the response to therapy but do not independently correlate with rate of fibrosis. Host factors that are known to increase the likelihood of fibrosis include older age at infection, male gender, and alcohol intake. Other host factors, possibly the immune phenotype, are thought to be very important in determining rate of fibrosis, yet these factors have not yet been identified. At present, there is no substitute for liver biopsy to assess fibrosis, and there is a compelling need to develop noninvasive markers, because none currently exist. The Metavir system, a five-stage scale used for the evaluation of the extent of fibrosis, is the most carefully validated method for scoring fibrosis. Remarkable progress has been made in understanding the cellular and molecular basis of fibrosis. For example, it is now known that hepatic stellate cells are the major source of extracellular matrix after their activation, which connotes a conversion from a resting, vitamin A-rich cell to one that is proliferative, fibrogenic, and contractile. Future research should focus on better understanding the cellular basis of fibrosis and its natural history as treatments for hepatitis C continue to improve.