Genetic variation in the IL28B (interleukin 28B; interferon lambda 3) region has been associated with sustained virological response (SVR) rates in patients with chronic hepatitis C (CHC) who were treated with peginterferon-α and ribavirin. We hypothesized that IL28B polymorphism is associated with intrahepatic expression of interferon-stimulated genes (ISGs), known to influence treatment outcome. IL28B genotyping (rs12979860) and whole-genome RNA expression were performed using liver biopsies from 61 North American patients with CHC. After correction for multiple testing (false discovery rate < 0.10), 164 transcripts were found to be differentially expressed by IL28B-type. The interferon signaling pathway was the most enriched canonical pathway differentially expressed by IL28B-type (P < 10(-5)), with most genes showing higher expression in livers of individuals carrying the poor-response IL28B-type. In 25 patients for which treatment response data were available, IL28B-type was associated with SVR (P = 0.0054). ISG expression was also associated with SVR; however, this was not independent of IL28B-type. Analysis of miR-122 expression in liver biopsies showed reduced miR-122 levels associated with poorer treatment outcome, independently of IL28B-type. No association was observed between IL28B-type and levels of liver IL28B or IL28A messenger RNA expression. IL28B protein sequence variants associated with rs12979860 were therefore investigated in vitro: no differences in ISG induction or inhibition of HCV replication were observed in Huh7.5 cells. Conclusion: The good response IL28B variant was strongly associated with lower level ISG expression. The results suggest that IL28B genotype may explain the relationship between hepatic ISG expression and HCV treatment outcome, and this is independent of miR-122 expression. IL28B-type was not associated with intrahepatic IL28B messenger RNA expression in vivo. Further investigation of the precise molecular mechanism(s) by which IL28B genetic variation influences HCV outcomes is warranted.