We previously demonstrated that the core protein of hepatitis C virus (HCV) can suppress gene expression and replication of hepatitis B virus (HBV) in a human hepatoma cell line (HuH-7). In this study, we have characterized the phosphorylation property of HCV core protein and examined the effect of phosphorylation on its suppressive activity of HBV. Our results indicated that both the full-length HCV core protein (22 kDa) and its processed or degraded forms (14 to 18 kDa) were phosphorylated in insect cells. As demonstrated by using the glutathione S-transferase fusion protein expression system and in vitro transcription and translation system, the phosphorylation of HCV core protein was carried out by protein kinase A (PKA) and protein kinase C (PKC) in vitro. In both kinase reactions, it was determined that the phosphorylated amino acid was a serine residue. The potential phosphorylated sites in core protein were identified as residues Ser-53 and Ser-116 for PKA and Ser-53 and Ser-99 for PKC. Comparison of the phosphorylation intensities of the wild type and Ser mutants suggested that Ser-99 and Ser-116 were the major phosphorylation sites for PKC and PKA, respectively. The phosphorylation of Ser-99 and Ser-116, but not Ser-53, in HCV core protein was essential for the suppressive activity of HCV core protein on HBV gene expression and replication in HuH-7 cells. Mutation of the former two serine residues to alanine or aspartate residues led to a drastic loss of the inhibitory effects of HCV core protein on HBV gene expression (both transcription and antigen production) and pregenomic RNA encapsidation, as well as the release of HBV virus particles. In contrast, the Ser-53 mutant conferred the same level of suppressive activity as the wild type did. This property is in accordance with the observation that Ser-99 and Ser-116 are the predominant phosphorylation sites in the HCV core construct. All serine mutants (including those with mutations in PKA, PKC, and both kinase recognition sites) of HCV core protein retained the ability to translocate into the nucleus. Furthermore, wild-type HCV core protein diminished its suppressive activity when cells were treated with PKA or PKC inhibitor. In conclusion, HCV core protein is a phosphoprotein and in HuH-7 cells, its trans suppression of HBV gene expression and replication is positively regulated by PKA and PKC. The role of phosphorylation in the control of trans-suppressive activity cannot be reproduced by introducing an acidic residue. In addition, our results imply that phosphorylation of serine residues by these two kinases is not a prerequisite for HCV core protein entrance into the nucleus.