Recognition of hepatitis C virus (HCV)-infected hepatocyes and interferon (IFN) induction are critical in antiviral immune response. We hypothesized that cell-cell contact between plasmacytoid dendritic cells (pDCs) and HCV-infected cells was required for IFN-α induction through the involvement of cell-surface molecules. Coculture of human peripheral blood mononuclear cells (PBMCs) with genotype 1a full-length (FL) HCV genomic replicon cells or genotype 2a Japanese fulminant hepatitis type 1 (JFH-1) virus-infected hepatoma cells (JFH-1), and not with uninfected hepatoma cells (Huh7.5), induced IFN-α production. Depletion of pDCs from PBMCs attenuated IFN-α release, and purified pDCs produced high levels of IFN-α after coculture with FL replicons or JFH-1-infected cells. IFN-α induction by HCV-containing hepatoma cells required viral replication, direct cell-cell contact with pDCs, and receptor-mediated endocytosis. We determined that the tetraspanin proteins, CD81 and CD9, and not other HCV entry receptors, were required for IFN-α induction in pDCs by HCV-infected hepatoma cells. Disruption of cholesterol-rich membrane microdomains, the localization site of CD81, or inhibition of the CD81 downstream molecule, Rac GTPase, inhibited IFN-α production. IFN-α induction involved HCV RNA and Toll-like receptor (TLR) 7. IFN-α production by HCV-infected hepatoma cells was decreased in pDCs from HCV-infected patients, compared to healthy controls. We found that preexposure of healthy PBMCs to HCV viral particles attenuated IFN-α induction by HCV-infected hepatoma cells or TLR ligands, and this inhibitory effect could be prevented by an anti-HCV envelope glycoprotein 2–blocking antibody. Conclusion: Our novel data show that recognition of HCV-infected hepatoma cells by pDCs involves CD81- and CD9-associated membrane microdomains and induces potent IFN-α production. (HEPATOLOGY 2013;58:940–949)