Hepatitis C virus (HCV) infection in humans is remarkably efficient in establishing viral persistence, leading to the development of liver cirrhosis and hepatocellular carcinoma. T cell responses have been reported to play a pivotal role in controlling HCV infection. However, HCV-specific T cell responses are significantly impaired in chronic HCV patients. This suggests that HCV may employ numerous mechanisms to counteract or possibly suppress the host T cell responses. Our laboratory is mainly focused on two inter-related arenas of biomedical research to elucidate the mechanism of HCV-mediated inhibition of T cell responses. Our research program involves both human and mouse studies. A better understanding of HCV-mediated immune regulation will provide a basis for the rational design of HCV therapeutics. Interaction of HCV-infected hepatocytes with NK cells and DC. The primary site of HCV replication occurs within hepatocytes in the liver. As a result of liver enodothelial cells perforated by fenestrations, hepatocytes are not separated by a basal membrane, and thereby HCV-infected hepatocytes are extensively capable of interacting with innate immune cells including NK, DC. Recent studies reveal that the function of NK and DC function is significantly impaired in chronic HCV patients. Given a critical role of NK and DC in limiting HCV replication at the early phase of viral infection, it is likely that HCV-infected hepatocytes might be responsible for impairing NK and DC function by enhancing the expression of immunoregulatory molecules (either soluble or cell surface). Thus, this impairment of innate immunity attributes to the failure of generating effective T cell responses to clear HCV infection. In this article, we will review studies highlighting the regulation of innate immunity by HCV and crosstalk between hepatocytes and NK/DC in the hepatic environment. Alteration of antigen presenting cell function by the binding of extracellular HCV core with the complement receptor. We have identified HCV core protein as an immunomodulatory molecule capable of suppressing the host immune response and inhibiting viral clearance; and we also determined a host target protein (C1q receptor: gC1qR), which interacts with HCV core. Importantly, HCV core protein is secreted from HCV-infected hepatocytes and free core protein is detectable in the bloodstream of HCV patients. Our studies revealed that the binding of extracellular HCV core protein to the gC1qR receptor inhibited human T cell responses via its suppressive effect on the activation and induction of pro-inflammatory responses by antigen presenting cells (i.e. macrophages and DC). This set of crucial observations now provides us with an explanation for why most patients infected with HCV do not clear the infection -- that is, the HCV core protein produced by this virus may play a pivotal role in suppression of host immune response to infection, which allows the virus to establish a persistent infection.