Background: Latent TB infection can persist for many years with about 10% lifetime risk of reactivation to active disease. However, in children with latent TB infection, disease develops within 2 years of infection. Recently, a new diagnostic test (QuantiFERON-TB Gold) which measures the production of interferon (IFN) gamma in whole blood upon stimulation with Mycobacterium tuberculosis has been introduced. The aim of this study is to compare the performance of the IFN-gamma assay with tuberculin skin test (TST) for the identification of latent TB infection in children in contact with active TB in the pediatric pulmonary ward. Materials and Methods: This cross-sectional study was conducted on 100 children, aged 2months – 15 years admitted to the Pediatric Ward of Masih Daneshvari Hospital during 2007-2008. Whole blood was collected for measuring Interferongamma using QuantiFERON-TB Gold kit (QFT-Cellestis Comp). In this procedure, Mycobacterium tuberculosis specific antigens (ESAT-6 and CFP-10) are used. In the present research, 100 children were studied and divided into 3 groups of case (TB), contact and control. PPD test was performed by injecting 0.1 ml of the 5 unit solution (Pasteur Institute of Iran) for all cases. Results: Twenty-eight percent of the contacts, 60% of the cases and 10% of the controls were Afghans; the remaining were Iranians. Smear of the gastric washing (3×) was prepared in contact and case (TB) groups; 30% of the cases (TB) were AFB positive, while all of the contacts had negative smears. History of BCG vaccination during neonatal period and BCG scar were present in all cases. Positive PPD test (PPD≥ 10 mm) was observed in 90% of the cases and 24% of the contacts. PPD test was negative in the control group. Out of 50 contacts, 18 (36%) showed positive QFT test; and of 20 TB patients, 18 (90%) had positive tests. Regarding age, children with positive QFT test belonged to the older age group. Conclusion: To our knowledge, this is the first study to investigate the performance of the whole blood IFN-γ assay in diagnosing latent TB infection in children in Iran. This study found a fair correlation between the TST and the whole blood IFN-γ assay in children at high risk of latent TB infection. Our study also highlighted fair and moderate agreement in contact and TB groups respectively between the TST and QFT –TB test in children at high risk for latent TB infection. More studies are required to clarify this relationship. (Tanaffos2010; 9(3): 22-27)