A pilot study was designed to determine the tolerance and effectiveness of natural or recombinant gamma interferon in patients with chronic hepatitis B. Sixteen patients received 0.5 to 3.0 million units (MU) per day of gamma interferon (IFN-gamma) for 7 days. Nineteen chronic hepatitis B patients who were treated with 5-6 MU leukocyte-derived alpha interferon (IFN-alpha) daily served as controls. All completed the treatment schedule. IFN-gamma exerted mild, but significant inhibitory effects (P less than .05) on serum DNA polymerase levels. However, the changes were significantly less (P less than .001) than those seen with IFN-alpha therapy when compared with percent change from basal values. In contrast, serum 2', 5'-oligoadenylate synthetase (2-5 AS) activities were markedly enhanced to a similar extent during therapy with both IFNs. Serum beta 2-microglobulin values were significantly increased by administration with both IFNs, although higher values were seen with IFN-gamma. Five patients received 1 MU IFN-gamma for 28 consecutive days and their HBeAg levels similarly decreased as those seen in patients treated with IFN-alpha. Side effects seemed to be greater during IFN-gamma therapy than IFN-alpha despite the lower doses used. The antiviral effect on serum HBV levels appeared less with IFN-gamma than with IFN-alpha. Alternatively immunomodulatory functions may have been enhanced with IFN-gamma in patients with chronic HBV infection.