Hepatic steatosis and hepatocellular carcinoma (HCC) are common and serious features of hepatitis C virus (HCV) infection, and the core protein has been shown to play distinct roles in the pathogenesis. Here we report the direct interaction of HCV core protein with retinoid X receptor alpha (RXRalpha), a transcriptional regulator that controls many aspects of cell proliferation, differentiation, and lipid metabolism. The core protein binds to the DNA-binding domain of RXRalpha, leading to increase the DNA binding of RXRalpha to its responsive element. In addition, RXRalpha is activated in cells expressing the core protein as well as in the livers of the core-transgenic mice that would develop hepatic steatosis and HCC later in their lives. Using promoter genes of cellular retinol binding protein II (CRBPII) and acyl-CoA oxidase as reporters, we also show that the expression of the core protein enhances the transcriptional activity regulated by the RXRalpha homodimer as well as by the heterodimer with peroxisome proliferator activated receptor alpha. Furthermore, expression of the CRBPII gene is also up-regulated in the livers of HCV core-transgenic mice. In conclusion, these results suggest that modulation of RXRalpha-controlled gene expression via interaction with the core protein contributes to the pathogenesis of HCV infection.