Autophagy is important for cellular homeostasis and can serve as innate immunity to remove intracellular pathogens. Here, we demonstrate by a battery of morphological and biochemical assays that hepatitis C virus (HCV) induces the accumulation of autophagosomes in cells without enhancing autophagic protein degradation. This induction of autophagosomes depended on the unfolded protein response (UPR), as the suppression of UPR signaling pathways suppressed HCV‐induced lipidation of the microtubule‐associated protein light chain 3 (LC3) protein, a necessary step for the formation of autophagosomes. The suppression of UPR or the suppression of expression of LC3 or Atg7, a protein that mediates LC3 lipidation, suppressed HCV replication, indicating a positive role of UPR and the incomplete autophagic response in HCV replication. Conclusion: Our studies delineate the molecular pathway by which HCV induces autophagic vacuoles and also demonstrate the perturbation of the autophagic response by HCV. These unexpected effects of HCV on the host cell likely play an important role in HCV pathogenesis. (HEPATOLOGY 2008.)