The hepatitis C virus genome encodes a polyprotein precursor that is co- and post-translationally processed by cellular and viral proteases to yield 10 mature protein products (C, E1, E2, p7, NS2, NS3, NS4A, NS4B, NS5A, and NS5B). Although most cleavages in hepatitis C virus polyprotein precursor proceed to completion during or immediately after translation, the cleavages mediated by a host cell signal peptidase are partial at the E2/p7 and p7/NS2 sites, leading to the production of an E2p7NS2 precursor. The sequences located immediately N-terminally of E2/p7 and p7/NS2 cleavage sites can function as signal peptides. When fused to a reporter protein, the signal peptides of p7 and NS2 were efficiently cleaved. However, when full-length p7 was fused to the reporter protein, partial cleavage was observed, indicating that a sequence located N-terminally of the signal peptide reduces the efficiency of p7/NS2 cleavage. Sequence analyses and mutagenesis studies have also identified structural determinants responsible for the partial cleavage at both the E2/p7 and p7/NS2 sites. Finally, the short distance between the cleavage site of E2/p7 or p7/NS2 and the predicted transmembrane alpha-helix within the P' region might impose additional structural constraints to the cleavage sites. The insertion of a linker polypeptide sequence between P-3' and P-4' of the cleavage site released these constraints and led to improved cleavage efficiency. Such constraints in the processing of a polyprotein precursor are likely essential for hepatitis C virus to post-translationally regulate the kinetics and/or the level of expression of p7 as well as NS2 and E2 mature proteins.