Chronic infection by hepatitis C virus (HCV) is a leading cause of liver disease for which better therapies are urgently needed. Because a clearer understanding of the viral life cycle may suggest novel anti-viral approaches, we studied the role of host signal peptide peptidase (SPP) in viral infection. This intramembrane protease cleaves within a C-terminal signal sequence in the viral core protein, but the molecular determinants of cleavage and whether it is required for infection in vivo are unknown. To answer these questions, we studied SPP processing in GB virus B (GBV-B) infection. GBV-B is the closest phylogenetic relative of HCV and offers an accurate surrogate model for HCV infection. We demonstrate that SPP also processes GBV-B core protein and that a serine residue in the hydrophobic region of the signal sequence (present also in HCV) is critical for efficient SPP cleavage. The small size of the serine side chain combined with its ability to form intra-and interhelical hydrogen bonds likely contributes to recognition of the signal sequence as a substrate for SPP. By introducing mutations with differing effects on SPP processing into an infectious GBV-B molecular clone, we demonstrate that SPP processing of the core protein is required for productive infection in primates. These results broaden our understanding of the mechanism and requirements for SPP cleavage and reveal a functional role in vivo for intramembrane proteolysis in host-pathogen interactions. Moreover, they identify SPP as a potential therapeutic target for reducing the impact of HCV infection.Intramembrane-cleaving proteases are a family of enzymes that target transmembrane domain sequences of proteins and thereby modulate cellular signaling, lipid biosynthesis, and the unfolded protein response (1-3). Signal peptide peptidase (SPP) 2 is an intramembrane-cleaving protease that cleaves certain signal sequences following proteolysis by signal peptidase (4, 5). Studies on the biological functions associated with SPP cleavage are very limited. In higher eukaryotes, cell-based analyses have indicated that disrupting the SPP processing of HLA-E epitopes blocks their presentation on the cell surface (6, 7). In the lower eukaryotes, such as Caenorhabditis elegans (8) and Drosophila melanogaster (9), inhibition of SPP activity by either RNAi or mutation impairs embryonic and larval development. SPP is necessary for maturation of the hepatitis C virus (HCV) core protein (10, 11). Core protein forms the virus capsid and is released from the viral polyprotein by signal peptidase and SPP through two coordinated cleavage events at a signal sequence that separates core from the E1 glycoprotein (4). Cleavage by SPP is essential for transfer of core from the endoplasmic reticulum (ER) membrane to lipid droplets, which are cytosolic storage organelles (10). However, because of the limited availability of animal models, it has not been possible to demonstrate that SPP cleavage of core is necessary for the production of virus progeny in vivo.GB virus B ...