Hepatitis C virus (HCV) is a major risk factor for human hepatocellular carcinoma (HCC) but the mechanisms underlying HCV-induced carcinogenesis are still poorly understood. We have hypothesized that viral variants, selected during long-term infection, might contribute to cellular transformation. To address this issue, we have investigated the effect of natural HCV core variants isolated from liver tumors (T), or their non-tumor (NT) counterparts, on the tumor growth factor-beta (TGF-beta) pathway, a major regulator of cellular proliferation, differentiation and apoptosis. We have found a significant reduction in TGF-beta reporter gene activity with the expression of core sequences isolated from liver tumors. In contrast, moderate or no effects were observed with non-tumor mutants or a core reference sequence. The molecular mechanisms have been characterized and involved the inhibition, by tumor-derived cores, of the DNA-binding activity of the Smad3/4 transcription factors complex. This inhibition occurs through a direct interaction between the central domain (amino acids 59-126) of tumor-derived core and the MH1 DNA-binding domain of Smad3, thus preventing its binding to DNA. We have therefore identified a new cell-signaling pathway targeted by HCV core and inhibited by tumor-derived core sequences. These results suggest that during chronic infection, there is selection of viral variants that may promote cell transformation by providing, to clonally expanding cells, resistance to TGF-beta antiproliferative effects.