Host and viral proteinases are believed to be required for the production of at least nine hepatitis C virus (HCV)-specific polyprotein cleavage products. Although several cleavages appear to be catalyzed by host signal peptidase or the HCV NS3 serine proteinase, the enzyme responsible for cleavage at the 2/3 site has not been identified. In this report, we have defined the 2/3 cleavage site and obtained evidence which suggests that this cleavage is mediated by a second HCV-encoded proteinase, located between aa 827 and 1207. This region encompasses the C-terminal portion of the 23-kDa NS2 protein, the 2/3 cleavage site, and the serine proteinase domain of NS3. Efficient processing at the 2/3 site was observed in mammalian cells, Escherichia coli, and in plant or animal cell-free translation systems in the absence of microsomal membranes. Cleavage at the 2/3 site was abolished by alanine substitutions for NS2 residues His-952 or Cys-993 but was unaffected by several other substitution mutations, including those that inactivate NS3 serine proteinase function. Mutations abolishing cleavage at the 2/3 site did not block cleavage at other sites in the HCV polyprotein. Cotransfection experiments indicate that the 2/3 site can be cleaved in trans, which should facilitate purification and further characterization of this enzyme.