Lipid droplets (LD) are dynamic storage organelles that are involved in lipid homeostasis. Hepatitis C virus (HCV) is closely associated with LDs. HCV Core and nonstructural (NS) proteins colocalize with LDs and presumably are involved in virion formation at that site. We demonstrated that HCV NS4B, an integral membrane protein in endoplasmic reticulum (ER), strongly targeted LDs. Confocal imaging studies showed that NS4B localized at the margins of LDs. Biochemical fractionation of HCV-replicating cells suggested that NS4B existed in membranes associated with LDs rather than on the LD surface membrane itself. The N- and C-terminal cytosolic domains of NS4B showed targeting of LDs, with the former being much stronger. In both domains, activity was present in the region containing an amphipathic α-helix, in which 10 hydrophobic residues were identified as putative determinants for targeting LDs. JFH1 mutants with alanine substitutions for the hydrophobic residues were defective for virus replication. W43A mutant with a single alanine substitution showed loss of association of NS4B with LDs and severely reduced release of infectious virions compared with wild-type JFH1. NS4B plays a crucial role in virus replication at the site of virion formation, namely, the microenvironment associated with LDs.