Interferon alfa (IFN-alpha)-based treatment is the only therapeutic option for chronic hepatitis C viral infection. However, the molecular mechanisms of IFN-alpha antiviral activity are not completely understood. The recent development of an HCV replicon cell culture system provides a feasible experimental model to investigate the molecular details of IFN-induced direct antiviral activity in hepatocytes. In this report, we show that IFN-alpha can effectively inhibit HCV subgenomic RNA replication and suppress viral nonstructural protein synthesis. Using cDNA microarray analysis, we also show that the replicon cells have different gene expression profile compared with the parental hepatoma cells (Huh7). IFN-alpha can induce a number of responsive genes in the replicon cells. One of the genes, 6-16 (G1P3), can enhance IFN-alpha antiviral efficacy. In addition, we demonstrate that IFN-alpha can significantly activate STAT3 in hepatoma cells, suggesting that this pathway plays a role in IFN-alpha signaling. In conclusion, our results indicate that IFN-alpha antiviral activity is associated with activation of STAT3-signaling pathway and intracellular gene activation. Our results also suggest that IFN-alpha-induced target genes may play an important role in IFN-alpha anti-HCV activity.