Steatosis is a frequent complication of hepatitis C virus infection. In mice, this condition is recapitulated by the expression of a single viral protein, the nucleocapsid core. Core localizes to the surface of lipid droplets (LDs) in infected liver cells through a process dependent on host diacylglycerol acyltransferase 1 (DGAT1), an enzyme that synthesizes triglycerides in the endoplasmic reticulum. Whether DGAT1 also plays a role in core-induced steatosis is uncertain. Here, we show that mouse embryonic fibroblasts isolated from DGAT1(-/-) mice are protected from core-induced steatosis, as are livers of DGAT1(-/-) mice expressing core, demonstrating that the steatosis is DGAT1-dependent. Surprisingly, core expression did not increase DGAT1 activity or triglyceride synthesis, thus excluding the possibility that core activates DGAT1 to cause steatosis. Instead, we find that DGAT1-dependent localization of core to LDs is a prerequisite for the steatogenic properties of the core. Using biochemical and immunofluorescence microscopy techniques, we show that the turnover of lipids in core-coated droplets is decreased, providing a physiological mechanism for core-induced steatosis. Our results support a bipartite model in which core first requires DGAT1 to gain access to LDs, and then LD-localized core interferes with triglyceride turnover, thus stabilizing lipid droplets and leading to steatosis.