Treatment of chronic hepatitis C with Interferon (IFN) alpha2b monotherapy results in 10% to 15% sustained virological response (SVR). Combining IFN with ribavirin increases this response. In this analysis, using the Markov model, 6 treatment strategies for chronic hepatitis C (previously untreated) were compared on the basis of incremental cost per additional quality-adjusted life years ($/QALY). Our results showed that the no treatment strategy was associated with a cost of $38,747 and 13.10 QALYs. The strategy using IFN alone for 48 weeks was associated with a cost of $35,642 and 14.05 QALYs. The strategy using IFN monotherapy followed by combination therapy for nonresponders and relapsers was associated with a cost of $34, 561 and 15.53 QALYs. A similar strategy, but limiting combination to relapsers only, was associated with a cost of $34,758 and 14.40 QALYs. The strategy using IFN with ribavirin as the initial therapy for all patients was associated with a cost of $34,792 and 15.31 QALYs. Finally, the strategy using viral genotyping first and then adjusting the duration of combination therapy based on genotype was associated with a cost of $37,263 and 15.89 QALYs. The strategy using genotyping to guide duration of combination therapy was the most cost-effective approach with an incremental cost-effectiveness ratio of $7,500 per QALY. Sensitivity analyses confirmed the robustness of these results. We conclude that combination of IFN and ribavirin with duration of therapy based on the viral genotype, is a cost-effective approach in treating patients with chronic hepatitis C.