Hepatitis C virus (HCV) is a major etiologic agent for chronic hepatitis worldwide and often leads to cirrhosis and hepatocellular carcinoma. However, the mechanism for development of chronic hepatitis or hepatocarcinogenesis by HCV remains unclear. Signal transducers and activators of transcription (STATs) family proteins function as the downstream effectors of cytokine signaling and play a critical role in cell growth regulation. In many cancers including liver, STAT3 is often constitutively activated, although the mechanism of persistent activation of STAT3 is unknown. The nonstructural protein 5A (NS5A) encoded from the HCV genome has shown cell growth regulatory properties. In this study, we have observed that HCV NS5A activates STAT3 phosphorylation, which in turn translocates into the nucleus. In vivo activation of STAT3 was also observed in the liver of transgenic mice expressing HCV NS5A. Introduction of NS5A in hepatoma cells modulated STAT3 downstream molecules Bcl-xL and p21 expression. To determine if STAT3 activation by NS5A could induce STAT3 mediated gene expression, a luciferase reporter construct based on a synthetic promoter was used to transfect hepatoma cells. Activation of endogenous cellular STAT3 by HCV NS5A induced luciferase gene expression through STAT3 specific binding elements. Our subsequent studies suggested that NS5A forms a complex with Jak1 and recruits STAT3 for activation. Taken together, our results suggested that NS5A activates STAT3 through co-operation of Jak1 kinase and activated STAT3 may contribute to HCV-mediated pathogenesis.