Hepatitis C Virus (HCV) infection occurs frequently in patients with preexisting mental illness. Treatment for chronic hepatitis C using interferon formulations often increases risk for neuro-psychiatric symptoms. Pegylated-Interferon-alpha (PegIFN-alpha) remains crucial for attaining sustained virologic response (SVR); however, PegIFN-alpha based treatment is associated with psychiatric adverse effects, which require dose reduction and/or interruption. This study's main objective was to identify genes induced by PegIFN-alpha and expressed in the central nervous system and immune system, which could mediate the development of psychiatric toxicity in association with antiviral outcome. Using peripheral blood mononuclear cells from Human Immunodeficiency Virus (HIV)/HCV co-infected donors (N = 28), DNA microarray analysis was performed and 21 differentially regulated genes were identified in patients with psychiatric toxicity versus those without. Using these 21 expression profiles a two-way-ANOVA was performed to select genes based on antiviral outcome and occurrence of neuro-psychiatric adverse events. Microarray analysis demonstrated that Interferon-stimulated-exonuclease-gene 20 kDa (ISG20) and Interferon-alpha-inducible-protein 27 (IFI27) were the most regulated genes (P < 0.05) between three groups that were built by combining antiviral outcome and neuro-psychiatric toxicity. Validation by bDNA assay confirmed that ISG20 expression levels were significantly associated with these outcomes (P < 0.035). Baseline levels and induction of ISG20 correlated independently with no occurrence of psychiatric adverse events and non-response to therapy (P < 0.001). Among the 21 genes that were associated with psychiatric adverse events and 20 Interferon-inducible genes (IFIGs) used as controls, only ISG20 expression was able to link PegIFN-alpha related neuro-psychiatric toxicity to distinct HCV-responses in patients co-infected with HIV and HCV in vivo.