Background/Aims: Ribavirin improves treatment response to pegylated-interferon (PEG-IFN) in chronic hepatitis C but the mechanism remains controversial. We studied correlates of response and mechanism of action of ribavirin in treatment of hepatitis C. Methods: 70 treatment-nave patients were randomized to 4 weeks of ribavirin (1000-1200 mg/d) or none, followed by PEG-IFN alfa-2a and ribavirin at standard doses and durations. Patients were randomized to undergo a liver biopsy either 24 hours before, or 6 hours after starting PEG-IFN. Hepatic gene expression was assessed by microarray and interferon-stimulated gene (ISG) expression quantified by the nCounter platform. Temporal changes in ISG expression were assessed by qPCR in peripheral-blood mononuclear cells (PBMC) and by serum levels of IP-10. Results: After four weeks of ribavirin monotherapy, HCV levels decreased by 0.50.5 log10 (p=0.009 vs. controls) and ALT by 33% (p<0.001). Ribavirin pretreatment, while modestly augmenting the induction of ISGs by PEG-IFN, did not modify the virological response to subsequent PEG-IFN and ribavirin treatment. However, biochemical, but not virological response to ribavirin monotherapy predicted response to subsequent combination treatment (rapid virological response, 71% in biochemical responders vs. 22% non-responders, p=0.01; early virological response, 100% vs. 68%, p=0.03, sustained virological response 83% vs. 41%, p=0.053). Ribavirin monotherapy lowered serum IP-10 levels but had no effect on ISG expression in PBMC. Conclusion: Ribavirin is a weak antiviral but its clinical effect in combination with PEG-IFN seems to be mediated by a separate, indirect mechanism, which may act to reset the interferon responsiveness in HCV-infected liver. Ribavirin pretreatment does not alter the clinical outcome of subsequent combination therapy.