Emerging data have indicated that hepatitis C virus (HCV) subverts the host antiviral response to ensure its persistence. We previously demonstrated that HCV protein expression suppresses type I interferon (IFN) signaling by leading to the reduction of phosphorylated STAT1 (P-STAT1). We also demonstrated that HCV core protein directly bound to STAT1. However, the detailed mechanisms by which HCV core protein impacts IFN signaling components have not been fully clarified. In this report, we show that the STAT1 interaction domain resides in the N-terminal portion of HCV core (amino acids [aa] 1 to 23). This domain is also required to produce P-STAT1 reduction and inhibit IFN signaling transduction. Conversely, the C-terminal region of STAT1, specifically the SH2 domain (aa 577 to 684), is required for the interaction of HCV core with STAT1. The STAT1 SH2 domain is critical for STAT1 hetero- or homodimerization. We propose a model by which the binding of HCV core to STAT1 results in decreased P-STAT, blocked STAT1 heterodimerization to STAT2, and, therefore, reduced IFN-stimulated gene factor-3 binding to DNA and disrupted IFN-stimulated gene transcription.