Mycophenolic acid (MPA) is a highly effective immunosuppressant that has broad antiviral activity against different viruses and can act in synergy with interferon-α (IFN-α) on hepatitis C virus (HCV) replication. MPA is a potent inosine monophosphate dehydrogenase (IMPDH) inhibitor but the antiviral mechanisms are less understood. The aim of this study was to investigate the inhibition of HCV infection by MPA and the molecular basis for its synergy with IFN-α. The role of IMPDH and interferon-stimulated genes (ISGs) was investigated in two HCV models using gain- or loss-of-function approaches. The in vivo effect of MPA treatment was studied in NOD/SCID mice engrafted with HCV replicon cells. Potent antiviral effects of MPA at clinically relevant concentrations were observed with both the subgenomic and JFH1-derived infectious HCV models. MPA treatment in mice resulted in a specific and robust inhibition of HCV replication. Ectopic expression of an MPA-resistant IMPDH2 mutant in HCV host cells completely reversed the antiproliferative effect of MPA but only partially affected the antiviral potency. However, similar to ribavirin, MPA induced expression of multiple antiviral ISGs, including interferon regulatory factor 1 (IRF1). Cotreatment of MPA with IFN-α resulted in additive effects on ISG expression and enhanced IFN-induced luciferase reporter activity. Knockdown of IRF1, but not IFITM3, significantly attenuated the inhibition of HCV replication by MPA. Conclusion: MPA exerts a potent anti-HCV effect in vitro and in mice and acts in synergy with IFN-α. MPA's antiviral activity partially depends on IMPDH but also involves stimulation of ISGs, providing a molecular basis for its synergy with IFN-α. (HEPATOLOGY 2012;55:1673–1683)