We have developed a genetic system to monitor the activity of the hepatitis C virus (HCV) NS3 serine protease. This genetic system is based on the bacteriophage lambda regulatory circuit where the viral repressor cI is specifically cleaved to initiate the switch from lysogeny to lytic infection. An HCV protease-specific target, NS5A-5B, was inserted into the lambda phage cI repressor. The target specificity of the HCV NS5A-5B repressor was evaluated by coexpression of this repressor with a β-galactosidase (βgal)-HCV NS32-181/421-34 protease construct. Upon infection of Escherichia coli cells containing the two plasmids encoding the cI.HCV5AB-cro and the βgal-HCV NS32-181/421-34 protease constructs, lambda phage replicated up to 8,000-fold more efficiently than in cells that did not express the HCV NS32-181/421-34 protease. This simple, rapid, and highly specific assay can be used to monitor the activity of the HCV NS3 serine protease, and it has the potential to be used for screening specific inhibitors.