Chronic infection with hepatitis C virus (HCV) is causally associated with the development of hepatocellular carcinoma (HCC). HCV is not cytolytic and replicates entirely in the cytoplasm. Viral interaction with the host leads to subversion of immune response and other defense mechanisms. The recent development of robust cell culture systems for HCV infection provides new opportunities for the study of virus-cell interaction and viral pathogenesis. HCV infection causes active inflammation and fibrosis, which ultimately progresses to cirrhosis. The onset of cirrhosis usually precedes the multistage process of tumor development, in which common themes of viral carcinogenesis can be identified. While chronic inflammation and cirrhosis are thought to play an important role in tumor initiation, the underlying mechanisms are incompletely understood. Recent studies have revealed that infection with HCV induces genome instability, leading to further genetic and epigenetic alterations which contribute to the full development of HCC tumor. The expression of viral oncoproteins such as C and NS5A is critically involved both in the induction of genome instability and in dysregulating cellular control of growth and signal transduction. A better understanding of the molecular pathogenesis of HCV will reveal novel strategies for the prevention and treatment of related diseases including HCC.