Vertical transmission accounts for the majority of pediatric cases of hepatitis C viral (HCV) infection. In contrast to the adult population who develop persistent viremia in approximately 80% of cases following exposure, the rate of mother-to-child transmission (2-6%) is strikingly low. Protection from vertical transmission likely requires the coordination of multiple components of the immune system. Placenta and decidua provide a direct connection between mother and infant. We hypothesized that innate immune responses would differ across the three compartments (decidua, placenta and cord blood) and that hepatitis C exposure would modify innate immunity in these tissues. The study was comprised of HCV-infected and healthy control mother and infant pairs from whom cord blood, placenta and decidua were collected with isolation of mononuclear cells. Multiparameter flow cytometry was performed to assess the phenotype, intracellular cytokine production and cytotoxicity of the cells. In keeping with a model where the maternal-fetal interface provides antiviral protection, we found a gradient in proportional frequencies of NKT and gammadelta-T cells being higher in placenta than cord blood. Cytotoxicity of NK and NKT cells was enhanced in placenta and placental NKT cytotoxicity was further increased by HCV infection. HCV exposure had multiple effects on innate cells including a decrease in activation markers (CD69, TRAIL and NKp44) on NK cells and a decrease in plasmacytoid dendritic cells in both placenta and cord blood of exposed infants. In summary, the placenta represents an active innate immunological organ that provides antiviral protection against HCV transmission in the majority of cases; the increased incidence in preterm labor previously described in HCV-seropositive mothers may be related to enhanced cytotoxicity of NKT cells.