The development of hepatocellular carcinoma (HCC) in persons who are persistently infected with hepatitis C virus (HCV) is a growing problem worldwide. Current antiviral therapies are not effective in many patients with chronic hepatitis C, and a greater understanding of the factors leading to progression of HCC will be necessary to design novel approaches to prevention of HCV-associated HCC. The lack of a small animal model of chronic HCV infection has hampered understanding of these factors. As HCV is an RNA virus with little potential for integration of its genetic material into the host genome, the mechanisms underlying HCV promotion of cancer are likely to differ from other models of viral carcinogenesis. In patients persistently infected with HCV, chronic inflammation resulting from immune responses against infected hepatocytes is associated with progressive fibrosis and cirrhosis. Cirrhosis is an important risk factor for HCC independent of HCV infection, and a majority of HCV-associated HCC arises in the setting of cirrhosis. However, a significant minority arises in the absence of cirrhosis, indicating that cirrhosis is not a prerequisite for cancer. Other lines of evidence suggest that direct, virus-specific mechanisms may be involved. Transgenic mice expressing HCV proteins develop cancer in the absence of inflammation or immune recognition of the transgene. In vitro studies have revealed multiple interactions of HCV-encoded proteins with cell cycle regulators and tumor suppressor proteins, raising the possibility that HCV can disrupt control of cellular proliferation, or impair the cell's response to DNA damage. A combination of virus-specific, host genetic, environmental and immune-related factors are likely to determine the progression to HCC in patients who are chronically infected with HCV. Here, we summarize current knowledge of the virus-specific mechanisms that may contribute to HCV-associated HCC.