With approximately 3% of the world's population (170 million people) infected with the hepatitis C virus (HCV), the WHO has declared HCV a global health problem. Upon acute infection about 50%-80% of subjects develop chronic hepatitis with viral persistence being at risk to develop liver cirrhosis and hepatocellular carcinoma. One characteristic of HCV is its enormous sequence diversity, which represents a significant hurdle to the development of both effective vaccines as well as to novel therapeutic interventions. Due to a polymerase that lacks a proofreading function HCV presents with a high rate of evolution, which enables rapid adaptation to a new environment including an activated immune system upon acute infection. Similarly, novel drugs designed to specifically inhibit viral proteins will face the potential problem of rapid selection of drug resistance mutations. This review focuses on the sequence diversity of HCV, the driving forces of evolution and the impact on immune control and treatment response. An important feature of any therapeutic or prophylactic intervention will be an efficient attack of a structurally or functionally important region in the viral protein. The understanding of the driving forces, but also the limits of viral evolution, will be fundamental for the design of novel therapies.