This article reviews the ways in which liver biopsy provides a resource to the clinician when making management decisions for patients with chronic hepatitis C. Liver biopsy provides information about the extent and distribution of inflammation and allows grading and staging of the disease (the amount of fibrosis). Furthermore, the liver biopsy allows some assessment of the rate of disease progression whenever the date of onset of infection is known. The presence of diffuse fibrosis or cirrhosis correlates with a lower likelihood of response to antiviral therapy, and the finding of severe necroinflammatory and fibrotic changes is helpful in determining the relative importance of beginning treatment early rather than deferring therapy. The importance of liver biopsy in the selection of patients for treatment is underscored by the fact that hepatitis C is a condition in which therapy is currently unable to successfully treat the majority of patients. There are no strong correlations between serum viral RNA, alanine aminotransferase (ALT) levels, and liver histopathology; therefore, the utility of aminotransferases and hepatitis C virus (HCV) RNA as surrogate tests for measuring disease activity in individual cases is limited. It is concluded that liver biopsy should be performed before initiating interferon therapy. At the present time, it is not known if and when repeat histological assessment is necessary. Preferably, it should only be performed in instances when the findings from the biopsy are likely to lead to a change in management of the patient.