Hepatitis E virus (HEV) is a hepatotropic virus with a single sense-strand RNA genome of approximately 7.2 kb in length. Details of the intracellular site of HEV replication can pave further understanding of HEV biology. In-frame fusion construct of functionally active replicase-enhanced green fluorescent protein (EGFP) gene was made in eukaryotic expression vector. The functionality of replicase-EGFP fusion protein was established by its ability to synthesize negative-strand viral RNA in vivo, by strand-specific anchored RT-PCR and molecular beacon binding. Subcellular co-localization was carried out using organelle specific fluorophores and by immuno-electron microscopy. Fluorescence Resonance Energy Transfer (FRET) demonstrated the interaction of this protein with the 3' end of HEV genome. The results show localization of replicase on the endoplasmic reticulum membranes. The protein regions responsible for membrane localization was predicted and identified by use of deletion mutants. Endoplasmic reticulum was identified as the site of replicase localization and possible site of replication.