Liver function was studied in patients with Down’s syndrome and persistent Australia antigen [Au(1)] and in two groups of mentally retarded matched controls without Au(1). Analysis by a matched pair technic demonstrated significant differences between patients with Down’s syndrome with Au(1) and the patients without Au(1) with respect to serum transaminases, bromsulphalein retention, cephalin flocculation, thymol turbidity, total serum protein, and serum albumin. There was a striking absence of jaundice and no elevation of serum bilirubin. The presence of Au(1) was associated with histologic abnormalities on biopsy of the liver. Although those with persistent Au(1) generally have slight but significant abnormalities in hepatic function and histologic abnormalities of the liver, some have no signs of hepatic disease. Thus, institutionalized patients with Down’s syndrome probably represent a previously unsuspected reservoir of an agent responsible for human viral hepatitis.