Hyponatraemia is common in patients with advanced cirrhosis and is associated with remarkable changes in brain cells, particularly a reduction in myoinositol and other intracellular organic osmolytes related to the hypo-osmolality of the extracellular fluid. It has been recently suggested that hyponatraemia may be an important factor associated with the development of overt hepatic encephalopathy (HE). To test this hypothesis, we retrospectively analysed the incidence and predictive factors of overt HE using a database of 70 patients with cirrhosis included in a prospective study comparing transjugular intrahepatic portosystemic shunts (TIPS) vs large-volume paracentesis in the management of refractory of ascites. Variables used in the analysis included age, sex, previous history of HE, treatment assignment (TIPS vs large volume paracentesis plus albumin), treatment with diuretics, serum bilirubin, serum creatinine and serum sodium concentration. Laboratory parameters were measured at entry, at 1 month and every 3 months during follow-up and at the time of development of HE in patients who developed this complication. During a mean follow-up of 10 months, 50 patients (71%) developed 117 episodes of HE. In the whole population of patients, the occurrence of HE was independently associated with serum hyponatraemia, serum bilirubin and serum creatinine. In conclusion, in patients with refractory ascites, the occurrence of HE is related to the impairment of liver and renal function and presence of hyponatraemia.