The efficacy and safety of sequential treatment with prednisone and interferon was evaluated in a randomized, controlled study on 43 children with biopsy proven HBsAg/HBeAg/hepatitis B virus-DNA positive, anti-delta negative, chronic hepatitis (34 chronic persistent hepatitis, 9 chronic active hepatitis). Patients received either a 1-month course of prednisone (0.6 to 0.3 mg/kg per day) followed by interferon alfa-2a (3 MU/m2, thrice weekly, for 12 months; 22 patients) or no treatment (21 patients). At the end of the study (20 months), clearance of hepatitis B virus-DNA and HBeAg seroconversion were observed in nine (41%) of the patients treated with prednisone and interferon and in two (9.5%) of the untreated controls (p = 0.020). Two of the treated patients who lost HBeAg, also cleared HBsAg. In the treated group, 13 (59%) patients had stable normal levels of alanine aminotransferase on their last examination. The baseline serum level of hepatitis B virus-DNA was an important predictor of response. In fact, HBeAg clearance was observed in 75% of patients with a baseline hepatitis B virus-DNA level lower than 100 pg/ml and in none with a level above 100 pg/ml. We suggest that combined treatment with prednisone followed by alfa-interferon may be safe and effective in inducing a stable clearance of HBeAg and, in some cases, of HBsAg in children with chronic hepatitis B and with a low level of viral replication. For children with high levels of viral replication, this regimen seems to be ineffective.