The initiation of translation on the positive-sense RNA genome of hepatitis C virus (HCV) is directed by an internal ribosomal entry site (IRES) that occupies most of the 341-nt 5' nontranslated RNA (5'NTR). Previous studies indicate that this IRES differs from picornaviral IRESs in that its activity is dependent upon RNA sequence downstream of the initiator AUG. Here, we demonstrate that the initiator AUG of HCV is located within a stem-loop (stem-loop IV) involving nt -12 to +12 (with reference to the AUG). This structure is conserved among HCV strains, and is present in the 5'NTR of the phylogenetically distant GB virus B. Mutant, nearly genome-length RNAs containing nucleotide substitutions predicted to enhance the stability of stem-loop IV were generally deficient in cap-independent translation both in vitro and in vivo. Additional mutations that destabilize the stem-loop restored translation to normal. Thus, the stability of the stem-loop is strongly but inversely correlated with the efficiency of internal initiation of translation. In contrast, mutations that stabilize this stem-loop had comparatively little effect on translation of 5' truncated RNAs by scanning ribosomes, suggesting that internal initiation of translation follows binding of the 40S ribosome directly at the site of stem-loop IV. Because stem-loop IV is not required for internal entry of ribosomes but is able to regulate this process, we speculate that it may be stabilized by interactions with a viral protein, providing a mechanism for feedback regulation of translation, which may be important for viral persistence.