Hepatitis following halothane anaesthesia may take two forms: a mild self-limiting disease or a more severe hepatitis with a high mortality. Whether these two forms represent two distinct entities or ends of a spectrum is unclear. Severe hepatitis is commoner after multiple exposures and has many of the characteristics of an immune-mediated hypersensitivity reaction. The incidence is very low; the best, albeit unsatisfactory, estimate of the incidence is about 1 in 3,700 patients with multiple halothane exposures. The mechanism of liver damage is uncertain: in some circumstances halothane may be directly hepatotoxic, but it remains to be conclusively proved that immune mechanisms are responsible. Studies from our unit have suggested that halothane hepatitis can positively be diagnosed by demonstration of antibodies reacting with halothane-altered liver cell determinants. The incidence of the condition can be reduced by taking a full anaesthetic history and avoiding the use of halothane in the high-risk patients, namely those who have had recent previous halothane anaesthesia and those who have had jaundice or unexplained post-operative pyrexia following earlier halothane anaesthetics. When halothane hepatitis has occurred, treatment is purely supportive with the possibility of transplantation for those in grade IV encephalopathy.