Hepatitis C virus is a positive single-strand RNA virus distantly related to flaviviruses. Therefore RNA replicase, an RNA-dependent RNA polymerase, may be essential for the replication of hepatitis C virus, as well as other RNA viruses. In this study we synthesized the recombinant polypeptide (HCV-NS5 antigen) with a 576 bp cDNA encoding a part of the NS5 region of the HCV genome that has the Gly-Asp-Asp motif. The antibody against this polypeptide was obtained from rabbit serum. In Western-blot analysis with NS5 IgG HCV antibody, an 84-kD protein was clearly detected as a single band in the microsomal fraction but not in the nuclear and mitochondrial fractions or in the cytosol fraction. Immunohistochemically, HCV-NS5 antigen was clearly stained in the cytoplasm of hepatocytes but not in the nucleus or cell membrane. Moreover, as determined on immunoelectron microscopy, HCV-NS5 antigen was demonstrated with fine granular distribution along the endoplasmic reticulum but not in other organelles, including the nucleus and mitochondria. Immunoreaction in other cell types was negative. These results indicate that replication of HCV may occur only in hepatocytes and that HCV-NS5 may be produced in the endoplasmic reticulum of these cells. HCV-NS5 antigen was stained only in the livers of hepatitis C virus–positive patients but not in sections from patients with chronic type B hepatitis or alcoholic fibrosis. In chronic type C liver disease, the overall detection rate of HCV-NS5 antigen was 56 (33 in chronic persistent hepatitis, 52 in chronic active hepatitis and 86 in cirrhosis). These results indicate that the replication of HCV may occur more frequently in the advanced than in the early stages of type C hepatitis. Recently, interferon has been used for treatment of chronic type C hepatitis. However, it is very difficult to determine when HCV is eliminated from the liver, even if hepatitis C virus RNA is not detected in serum. Immunostaining of HCV-NS5 antigen in liver biopsy sections may be helpful in evaluating the cessation of HCV replication. (Hepatology 1994;19:265–272).