The aims of the present study were to clarify the risk factors for the development of hepatocellular carcinoma (HCC) in chronic hepatitis C virus (HCV) infection and to investigate the effectiveness of interferon (IFN) therapy. We retrospectively studied 343 patients who had been admitted to our hospital; 161 with chronic hepatitis, 49 with liver cirrhosis, 42 with chronic hepatitis bearing HCC and 91 with liver cirrhosis bearing HCC. The mean (+/- SD) observation period was 41.6 +/- 31.1 months. The mean age of HCC and non-HCC patients was 63.5 +/- 7.6 and 56.9 +/- 12.5 years, respectively (P < 0.001). The HCV genotype II (1b) was the most prevalent genotype (92.5%) in HCC patients and the mean age was higher among patients with this genotype (63.6 +/- 7.7 years). Multivariate analysis identified age (P < 0.001), the male gender (P < 0.01), HCV genotype II (1b) (P < 0.05) and excessive alcohol intake (P < 0.05) as independent factors associated with the development of HCC. There was no relationship between the development of HCC and serum HCV levels as quantified by branched DNA assay or competitive reverse transcription polymerase chain reaction. The incidence of HCC in patients who had not received IFN therapy was 10.4/100 person-year, while that of patients who had received IFN therapy was 1.2/100 person-year (P < 0.01) by the person-year method. The low incidence of HCC in patients treated with IFN suggests that IFN may prevent the development of HCC.