We present a case of intracellular vitamin B12 deficiency presenting with confusion, subacute combined degeneration of the cord, megaloblastic anaemia and intrinsic factor antibodies in the serum. Diagnosis was delayed by a normal serum B12 level and was confirmed by a grossly elevated serum homocysteine. There was a dramatic response to steroids. The patient was heterozygous for the transcobalamin (TC) II polymorphism 776C --> G. This case demonstrates the importance of functional assessment of intracellular B12 activity (e.g. serum homocysteine) in excluding B12 deficiency, the role of steroids in pernicious anaemia and a possible clinical correlation of a TCII polymorphism.