Hepatitis C virus (HCV) is a major cause of chronic liver disease that frequently leads to steatosis, cirrhosis, and eventually hepatocellular carcinoma (HCC). HCV core protein is not only a component of viral particles but also a multifunctional protein because liver steatosis and HCC are developed in HCV core gene-transgenic (CoreTg) mice. Proteasome activator PA28␥/REG␥ regulates host and viral proteins such as nuclear hormone receptors and HCV core protein. Here we show that a knockout of the PA28␥ gene induces the accumulation of HCV core protein in the nucleus of hepatocytes of CoreTg mice and disrupts development of both hepatic steatosis and HCC. Furthermore, the genes related to fatty acid biosynthesis and srebp-1c promoter activity were up-regulated by HCV core protein in the cell line and the mouse liver in a PA28␥-dependent manner. Heterodimer composed of liver X receptor ␣ (LXR␣) and retinoid X receptor ␣ (RXR␣) is known to up-regulate srebp-1c promoter activity. Our data also show that HCV core protein enhances the binding of LXR␣/RXR␣ to LXR-response element in the presence but not the absence of PA28␥. These findings suggest that PA28␥ plays a crucial role in the development of liver pathology induced by HCV infection.fatty acid ͉ proteasome ͉ sterol regulatory element-binding protein (SREBP) ͉ RXR␣ ͉ LXR␣ H epatitis C virus (HCV) belongs to the Flaviviridae family, and it possesses a positive, single-stranded RNA genome that encodes a single polyprotein composed of Ϸ3,000 aa. The HCV polyprotein is processed by host and viral proteases, resulting in 10 viral proteins. Viral structural proteins, including the capsid (core) protein and two envelope proteins, are located in the N-terminal one-third of the polyprotein, followed by nonstructural proteins.HCV infects Ͼ170 million individuals worldwide, and then it causes liver disease, including hepatic steatosis, cirrhosis, and eventually hepatocellular carcinoma (HCC) (1). The prevalence of fatty infiltration in the livers of chronic hepatitis C patients has been reported to average Ϸ50% (2, 3), which is higher than the percentage in patients infected with hepatitis B virus and other liver diseases. However, the precise functions of HCV proteins in the development of fatty liver remain unknown because of the lack of a system sufficient to investigate the pathogenesis of HCV. HCV core protein expression has been shown to induce lipid droplets in cell lines and hepatic steatosis and HCC in transgenic mice (4-6). These reports suggest that HCV core protein plays an important role in the development of various types of liver failure, including steatosis and HCC.Recent reports suggest that lipid biosynthesis affects HCV replication (7-9). Involvement of a geranylgeranylated host protein, FBL2, in HCV replication through the interaction with NS5A suggests that the cholesterol biosynthesis pathway is also important for HCV replication (9). Increases in saturated and monounsaturated fatty acids enhance HCV RNA replication, whereas increases in polyunsaturat...