Hepatitis C virus (HCV) replicates through an error-prone process that may support the evolution of genetic variants resistant to the host cell antiviral response and interferon (IFN)-based therapy. We evaluated HCV-IFN interactions within a long-term culture system of Huh7 cell lines harboring different variants of an HCV type 1b subgenomic RNA replicon that differed at only two sites within the NS5A-encoding region. A replicon with a K insertion at HCV codon 2040 replicated efficiently and exhibited sequence stability in the absence of host antiviral pressure. In contrast, a replicon with an L2198S point mutation replicated poorly and triggered a cellular response characterized by IFN-beta production and low-level IFN-stimulated gene (ISG) expression. When maintained in long term-culture, the L2198S RNA evolved into a stable high-passage (HP) variant with six additional point mutations throughout the HCV protein-encoding region that enhanced viral replication. The HP RNA transduced Huh7 cells with more than 1,000-fold greater efficiency than its L2198S progenitor or the K2040 sequence. Replication of the HP RNA resisted suppression by IFN-alpha treatment and was associated with virus-directed reduction in host cell expression of ISG56, an antagonist of HCV RNA translation. Accordingly, the HP RNA was retained within polyribosome complexes in vivo that were refractory to IFN-induced disassembly. These results identify ISG56 as a translational control effector of the host response to HCV and provide direct evidence to link this response to viral sequence evolution, ISG regulation, and selection of the IFN-resistant viral phenotype.