Hepatitis C virus (HCV) core protein is believed to play critical roles in the virus morphogenesis and pathogenesis. In HCV polyprotein, core protein terminates with a signal peptide followed by E1 envelope protein. It has remained unclear whether cleavage by host cell signal peptidase (SP) at the core-E1 junction to generate the complete form of core protein, which is anchored in the endoplasmic reticulum membrane, is absolutely required for cleavage within the signal peptide by host cell signal peptide peptidase (SPP) to liberate the mature form of core protein, which is then free for trafficking to lipid droplets. In this study, the possible sources of disagreement in published reports have been examined, and we conclude that a product generated upon inhibition of SP-catalysed cleavage at the core-E1 junction in heterologous expression systems was incorrectly identified as mature core protein. Moreover, inhibition of this cleavage in the most relevant model of human hepatoma cells replicating a full-length HCV genome was shown to abolish interaction of core protein with lipid droplets and production of infectious progeny virus. These results firmly establish that SPP-catalysed liberation of mature core protein is absolutely dependent on prior cleavage by SP at the correct core-E1 site to generate the complete form of core protein, consistent with this obligatory order of processing playing a role in HCV infectious cycle.