Interferon-alpha (IFN-α) is the only effective treatment for chronic hepatitis B and C. Over 2/3 of methadone-substituted patients suffer from chronic hepatitis C but a history of psychiatric disorders or drug addiction is still seen as a contraindication for IFN-α because of a possible increased risk of severe psychiatric side effects such as depression, suicide attempts or psychotic episodes. We report on the case of a 33-year-old patient with chronic hepatitis C and a positive psychiatric history (drug abuse, borderline personality and four suicide attempts). After 4 months of therapy with IFN-α he developed a psychosis with persecution mania, complex thought disorder, disturbance of sexual identity, sleeplessness, anxiety, depression and increased irritability with suicidal thoughts. Symptoms did not disappear after discontinuation of interferon treatment. To our knowledge, there are no other reports of persistent psychosis with a possible association to interferon treatment. Development of psychosis and other psychiatric side-effects may be an indication of possible neuromodulatory effects of IFN-α with long-term treatment. On the other hand, the treatment for hepatitis C was successful. Ideas for safer treatment in methadone patients with psychiatric co-morbidity and chronic hepatitis C are needed.