Background Epidemiological data suggest that chronic hepatitis C virus (HCV) infection may contribute to the development of diabetes mellitus. Therapy of HCV infection with recombinant interferon‐α (r‐IFN‐α) can also impair of glucose metabolism. Methods To investigate the impact of HCV infection and the therapy with r‐IFN‐α on glucose metabolism we measured insulin sensitivity, glucose effectiveness, and first and second phase insulin secretion, using the minimal modelling analysis of frequently sampled intravenous glucose tolerance tests in 13 nondiabetic patients with HCV‐induced liver disease before and after therapy with r‐INF‐α (6 × 106 U, subcutaneously, three times a week over 4 months). Liver biopsy was performed to evaluate and score liver fibrosis as a marker of HCV‐induced cell injury. Results Insulin sensitivity (r = − 0.59, P < 0.05) and first phase insulin secretion (r = − 0.66, P < 0.03) were negatively related to the fibrosis score. Insulin sensitivity rose from 1.96 (SEM 0.37, n = 8) to 5.69 (SEM 0.99, n = 8) 10−4 min−1 per μU mL−1 (P < 0.01) in responders and from 2.51 (SEM 0.61, n = 5) to 6.95 (SEM 1.99, n = 5) in nonresponders after 4 months r‐INF‐α therapy. Fasting free fatty acids decreased significantly to about 50% (P < 0.01) in patients with and without therapy response after 4 months, whereas first phase insulin secretion did not change. Conclusions HCV‐induced liver injury is related to the deterioration of insulin sensitivity and first phase insulin response, thus impairing glucose homeostasis in these HCV‐infected patients. The administration of r‐INF‐α three times a week over 4 months is not associated with an impairment of glucose homeostasis.