GB virus type C (GBV-C) viremia is associated with reduced CD4+ T cell expansion following IL-2 therapy and with a reduction in T cell activation in HIV-infected individuals. The mechanism(s) by which GBV-C might alter T cell activation or IL-2 signaling have not been studied. In this study, we assess IL-2 release, IL-2R expression, IL-2 signaling, and cell proliferation in tet-off Jurkat cells expressing the GBV-C envelope glycoprotein (E2) following activation through the TCR. TCR activation was induced by incubation in anti-CD3/CD28 Abs. IL-2 release was measured by ELISA, STAT5 phosphorylation was assessed by immunoblot, and IL-2Rα (CD25) expression and cell proliferation were determined by flow cytometry. IL-2 and IL-2Rα steady-state mRNA levels were measured by real-time PCR. GBV-C E2 expression significantly inhibited IL-2 release, CD25 expression, STAT5 phosphorylation, and cellular proliferation in Jurkat cells following activation through the TCR compared with control cell lines. Reducing E2 expression by doxycycline reversed the inhibitory effects observed in the E2-expressing cells. The N-terminal 219 aa of E2 was sufficient to inhibit IL-2 signaling. Addition of purified recombinant GBV-C E2 protein to primary human CD4+ and CD8+ T cells inhibited TCR activation-induced IL-2 release and upregulation of IL-2Rα expression. These data provide evidence that the GBV-C E2 protein may contribute to the block in CD4+ T cell expansion following IL-2 therapy in HIV-infected individuals. Furthermore, the effects of GBV-C on IL-2 and IL-2-signaling pathways may contribute to the reduction in chronic immune activation observed in GBV-C/HIV-coinfected individuals.