The protease activity of the hepatitis C virus (HCV) NS3 protein has been investigated using transient expression methods in mammalian cells, as well as in vitro transcription/translation systems. We confirmed that expression of the NS3-5 polyprotein in rabbit reticulocyte lysates results in efficient cis processing at the NS3/NS4 junction. However, processing at the other predicted sites of NS3-mediated cleavage varied markedly in efficiency, the site most susceptible being that between NS5A and NS5B. Time-course analysis of the proteolytic processing of the HCV non-structural precursor showed that the cis cleavage between NS3 and NS4 occurred extremely rapidly. However, efficient cleavage at this position was dependent on the prior removal of the NS2 protein. Furthermore, the presence of uncleaved NS2 sequences on the enzyme severely impeded NS3-mediated proteolysis at downstream sites in the polyprotein. This suggests therefore that efficient cleavage at the NS2/NS3 junction is a pivotal event in HCV replication. During the course of this study a proteolytically inactive mutant of NS3 was characterized carrying a previously unreported amino acid substitution near the proposed active site of the enzyme. Molecular modelling suggested that the amino acid present at this position may influence the conformation of the active site of the enzyme. Recently a number of reports have described a second protease activity, located in the NS2/NS3 region, which is responsible for cleavage at the NS2/NS3 junction. We have identified an isolate of HCV, obtained from a U.K. patient, which has a virtually inactive NS2/NS3 protease. The possible implications of this observation are discussed.