A self-modulating mechanism by the hepatitis C virus (HCV) core protein has been suggested to influence the level of HCV replication, but current data on this subject are contradictory. We examined the effect of wild-type and mutated core protein on HCV IRES- and cap-dependent translation. The wild-type core protein was shown to inhibit both IRES- and cap-dependent translation in an in vitro system. This effect was duplicated in a dose-dependent manner with a synthetic peptide representing amino acids 1-20 of the HCV core protein. This peptide was able to bind to the HCV IRES as shown by a mobility shift assay. In contrast, a peptide derived from the hepatitis B virus (HBV) core protein that contained a similar proportion of basic residues was unable to inhibit translation or bind the HCV IRES. A recombinant vaccinia-HCV core virus was used to examine the effect of the HCV core protein on HCV IRES-dependent translation in cells and this was compared with the effects of an HBV core-recombinant vaccinia virus. In CV-1 and HuH7 cells, the HCV core protein inhibited translation directed by the IRES elements of HCV, encephalomyocarditis virus and classical swine fever virus as well as cap-dependent translation, whereas in HepG2 cells, only HCV IRES-dependent translation was affected. Thus, the ability of the HCV core protein to selectively inhibit HCV IRES-dependent translation is cell-specific. N-terminal truncated (aa 1-20) HCV core protein that was expressed from a novel recombinant vaccinia virus in cells abrogated the inhibitory phenotype of the core protein in vivo, consistent with the above in vitro data.