Hepatitis C virus (HCV) infection leads to severe liver diseases including hepatocellular carcinoma (HCC). Phosphatase and tensin homolog deleted on chromosome 10 (PTEN), a tumour suppressor, is frequently mutated or deleted in HCC tumors. PTEN has previously been demonstrated to inhibit HCV secretion. In this study, we determined the effects of PTEN on the other steps in HCV life cycle, including entry, translation, and replication. We showed that PTEN inhibits HCV entry through its lipid phosphatase activity. PTEN has no effect on HCV RNA translation. PTEN decreases HCV replication and the protein phosphatase activity of PTEN is essential for this function. PTEN interacts with the HCV core protein and requires R50 in domain I of HCV core and PTEN residues 1-185 for this interaction. This interaction is required for PTEN-mediated inhibition of HCV replication. This gives rise to a reduction in PTEN levels and intracellular lipid abundance, which may in turn regulate HCV replication. HCV core domain I protein increases the lipid phosphatase activity of PTEN in an in vitro assay, suggesting that HCV infection can also regulate PTEN. Taken together, our results demonstrated an important regulatory role of PTEN in the HCV life cycle.