Pulmonary toxicity is a rare but potentially fatal side effect occurring during interferon (IFN) alpha treatment for chronic hepatitis C. We present a 47-year-old woman who had chronic hepatitis C and was treated with pegylated IFN alpha-2b in combination with ribavirin, with a good virological response by week 10 of therapy. Then the patient began to complain of dyspnea on exertion and a dry cough. A diagnosis of interstitial pneumonitis was made according to the results of chest X-rays, high resolution computed tomography and bronchoalveolar lavage analysis. Pegylated IFN alpha-2b has a longer absorption and elimination half-life than conventional IFN alpha-2b and a comparable potency to conventional IFN alpha-2b. Although the tolerability of pegylated IFN alpha is comparable to that of conventional IFN alpha, pulmonary toxicity may occur more frequently with long-acting pegylated IFN alpha therapy at an inappropriately high dose. Based on a MEDLINE search up to 2004, we believe that this is the first reported case of a patient recovering from interstitial pneumonitis associated with pegylated IFN alpha-2b for chronic hepatitis C. Physicians should keep in mind the possibility of this complication when treating chronic hepatitis C patients with pegylated IFN alpha-2b and ribavirin combinational therapy.