Hepatitis C virus (HCV) infection is a major global health problem. Hepatic expression of immune costimulatory signaling molecules (e.g., B7) is known to be associated with ongoing liver injury in hepatitis C patients. However, due to the general lack of viral culture systems and adequate animal models, the function of these molecules in disease pathogenesis is poorly understood. To investigate the role of CD86 in HCV-related liver injury, we developed two transgenic mouse lineages with inducible expression of HCV structural proteins and constitutive expression of the costimulatory molecule CD86/B7.2 in the liver. Using a hydrodynamic-based, nonviral delivery protocol, we induced HCV transgene expression in the livers of HCV and CD86 single- and double-transgenic mice. We found that hepatic CD86 expression resulted in increased activation of and cytokine production (e.g., interleukin-2 and gamma interferon) by CD4+ T cells and that the retention of these cells was associated with more pronounced necroinflammatory lesions in the liver. Taken together, these data suggest that augmented, parenchymal antigen presentation conferred by hepatocyte CD86 expression alters homeostasis and effector functions of CD4+ T cells and contributes to liver injury. This study provides an additional rationale for exploring immunomodulation-based therapies that could reduce disease progression in individuals with chronic HCV infection.