Transgenic mice have been produced that express the hepatitis C virus (HCV) core protein in the liver under the transcriptional control of the mouse major urinary protein promoter. These animals express the full length core protein in cytoplasm of their hepatocytes at levels comparable to those detected in naturally infected patients, without histological or biochemical evidence of liver disease or hepatocellular carcinoma. This contrasts with recent reports that HCV core protein can transform NIH 3T3 cells and cooperates with H-ras to transform primary rat fibroblasts in vitro. Coexpression of HCV core protein in double transgenic mice that replicate the hepatitis B virus (HBV) does not inhibit hepatocellular HBV gene expression or replication, contrary to reports that it inhibits HBV replication in HuH-7 cells after transient transfection in vitro. We have also produced transgenic mice in which a C-terminally truncated (aa384-715) glycosylated HCV E2 protein is expressed in the liver under the transcriptional control of the mouse albumin promoter. Despite the high level expression of HCV E2 protein, no evidence of liver disease was detected in these animals. These results suggest that the HCV core and E2 proteins are not cytopathic for the hepatocyte in vivo, and they represent an initial step in the development of a small animal model of HCV immunopathology.