The chronicity of hepatitis C virus (HCV) infection raises the question of how HCV is able to persist in hepatic cells. We show that human primary hepatocytes and human hepatic cell lines (Huh7 and HepG2) spontaneously produce interferon (IFN)-α that is inhibited in the HCV replicon cells (Huh.8 and FCA-1). Silencing IFN-α gene expression by IFN-α small interfering RNA (siRNA) in the HCV replicon cells resulted in increased HCV replicon expression. The activation of IFN-α expression by interferon regulatory factor (IRF-7) led to the inhibition of HCV replicon expression, whereas the anti–IFN-α receptor antibody could partially block IRF-7–mediated HCV replicon inhibition. In addition, the blockade of IFN-α receptor by anti–IFN-α receptor antibody on the replicon cells increased HCV replicon expression. Among the HCV nonstructural (NS) proteins tested, NS5A is the most potent inhibitor of IFN-α expression by the hepatic cells. Investigation of the mechanism of HCV action on IFN-α showed that IRF-7–induced IFN-α promoter activation was inhibited in the HCV replicon cells. Furthermore, IRF-7 expression was restricted in the HCV replicon cells. In conclusion, we provide direct evidence that HCV undermines the intracellular innate immunity of the target cells, which may account for HCV persistence in hepatic cells. (HEPATOLOGY 2005;42:00–00.) (HEPATOLOGY 2005;42:819–827.)