Hepatitis C virus (HCV) is a leading cause of chronic hepatitis, cirrhosis, and hepatocellular carcinoma. The absence of culture systems permissive for HCV replication has presented a major bottleneck to antiviral development. We sought to recapitulate the early steps in the life cycle of HCV by means of DNA-based expression of viral genomic sequences. Here we report expression of replicating HCV RNA by using a, to our knowledge, novel binary expression system in which cells were transfected with a T7 polymerase-driven full-length HCV cDNA plasmid containing a cis-acting hepatitis Delta ribozyme to control 3' cleavage, and infected with vaccinia-T7 polymerase. HCV genomic and replicative strand synthesis, in addition to protein synthesis, was detectable and depended on full-length HCV sequences. Moreover, the system was capable of generating HCV RNA quasispecies, consistent with the action of the low-fidelity HCV NS5B RNA polymerase. IFN-alpha, but not ribavirin, directly inhibited the viral replicative cycle in these cells, identifying the virus itself and not solely the immune system as a direct target of IFN action. The availability of a cell-based test for viral replication will facilitate screening of inhibitory compounds, analysis of IFN-resistance mechanisms, and analysis of virus-host cell interactions.