Proteolytic processing of the nonstructural proteins of the hepatitis C virus (HCV) is mediated by two viral proteinases: the NS2-3 proteinase cleaving at the NS2/3 junction and the NS3 serine-type proteinase responsible for processing at the NS3/4A, NS4A/B, NS4B/5A, and NS5A/B sites. Activity of the NS3 proteinase is modulated by NS4A. In the absence of this cofactor processing at the NS3-dependent sites does not occur or, in the case of the NS5A/B junction, is poor but increased when NS4A is present. Although recent studies demonstrated that proteinase activation requires direct interaction between NS3 and NS4A, the mechanism by which NS4A exerts the activation function is not known. To further analyze the conditions of proteinase activation and to characterize the NS3 sequences important for complex formation and activation we used an in vitro assay in which radiolabeled HCV substrates were mixed with NS3 proteinase and synthetic NS4A peptides. We found that microsomal membranes are not required for proteinase activation. However, they are important for efficient accessibility of the NS4A/B site but not the other trans-cleavage sites. Studies with NS3 deletion mutants identified a region between amino acids 15 and 22 which is essential for proteinase activation. Results obtained with several mutations introduced into this sequence show that a weak overall association between NS3 and NS4A is sufficient for proteinase activation and suggest that a beta-sheet at the NS3 amino terminus plays an important role. Although not essential for proteinase activation the amino terminal 14 NS3 residues were found to have an auxiliary function probably by stabilizing the NS3/4A interaction. Finally, we could demonstrate intracellular, peptide-mediated modulation of proteinase activity providing the basis for the development of a novel therapeutic concept.