Genetic variability is a hallmark of RNA virus populations. However, transmission to a new host often results in a marked decrease in population diversity. This genetic bottlenecking is observed during hepatitis C virus (HCV) transmission and can arise via a selective sweep or through the founder effect. To model HCV transmission, we utilized chimeric SCID/Alb-uPA mice with transplanted human hepatocytes and infected them with a human serum HCV inoculum. E1E2 glycoprotein gene sequences in the donor inoculum and recipient mice were determined following single-genome amplification (SGA). In independent experiments, using mice with liver cells grafted from different sources, an E1E2 variant undetectable in the source inoculum was selected for during transmission. Bayesian coalescent analyses indicated that this variant arose in the inoculum pretransmission. Transmitted variants that established initial infection harbored key substitutions in E1E2 outside HVR1. Notably, all posttransmission E1E2s had lost a potential N-linked glycosylation site (PNGS) in E2. In lentiviral pseudoparticle assays, the major posttransmission E1E2 variant conferred an increased capacity for entry compared to the major variant present in the inoculum. Together, these data demonstrate that increased envelope glycoprotein fitness can drive selective outgrowth of minor variants posttransmission and that loss of a PNGS is integral to this improved phenotype. Mathematical modeling of the dynamics of competing HCV variants indicated that relatively modest differences in glycoprotein fitness can result in marked shifts in virus population composition. Overall, these data provide important insights into the dynamics and selection of HCV populations during transmission.