Interferon‐γ1b (IFN‐γ1b) is a pleiotropic cytokine that displays antifibrotic, antiviral, and antiproliferative activity. A total of 502 patients with compensated liver disease and an Ishak fibrosis score of 4‐6 were randomized in a double‐blind, placebo‐controlled study, and 488 of these patients received subcutaneous injections of IFN‐γ1b 100 μg (group 1, n = 169), IFN‐γ1b 200 μg (group 2, n = 157), or placebo (group 3, n = 162) 3 times a week for 48 weeks. Most patients (83.6%) had cirrhosis at baseline (Ishak score = 5 or 6). Posttreatment liver biopsies were assessed in a blinded fashion for a reduction of 1 or more Ishak points (primary endpoint). Four hundred twenty patients with pretreatment and posttreatment liver biopsies were evaluable and showed no improvement in Ishak score between the 3 treatment groups (12.1%, 12.4%, and 16% of patients in groups 1, 2, and 3, respectively; P > 0.05). Analysis of IFN‐γ–inducible biomarkers revealed that interferon‐inducible T cell–alpha chemoattractant (ITAC), an IFN‐γ–inducible CXCR3 chemokine was an independent predictor of stable or improving Ishak score. IFN‐γ1b was well tolerated. There were similar numbers of deaths in all 3 arms (5, 5, and 4, respectively), and most were related to complications of cirrhosis. Conclusion: IFN‐γ1b therapy was not able to reverse fibrosis in patients with advanced liver disease for 1 year. Subgroups of patients with elevated ITAC levels and perhaps less advanced disease may be considered for future studies with IFN‐γ1b. (HEPATOLOGY 2007;45:569–578.)