The E1 glycoprotein of hepatitis C virus is a transmembrane glycoprotein with a C-terminal anchor domain. When expressed in Escherichia coli, E1 induces a change in membrane permeability that is toxic to the bacterial cell. The C-terminal hydrophobic region (aa 331-383) of E1 is mainly responsible for membrane association and for inducing changes in membrane permeability. These observed changes are similar to those produced in E. coli by influenza virus M2, human immunodeficiency virus gp41 and poliovirus 3AB proteins, whose hydrophobic domains are thought to cause pore formation in biological membranes. To further characterize the activity of E1 at a molecular level, the membrane-permeabilizing ability of a second internal hydrophobic region (aa 262-291) was examined by expressing different deletion mutants of E1 in an E. coli system that is widely used for analysing membrane-active proteins from other animal viruses. Moreover, highly conserved amino acids in the C-terminal hydrophobic region were mutated to identify residues that are critical for inducing changes in membrane permeability. Analysis of cell growth curves of recombinant cultures and membrane-permeability assays revealed that synthesis of this fragment increased the flux of small compounds through the membrane and caused progressive cell lysis, suggesting that this domain has membrane-active properties. Furthermore, analysis of C-terminal mutants indicated that the conserved amino acids Arg(339), Trp(368) and Lys(370) play a critical role in protein function, as both cell lysis and changes in membrane permeability induced by the wild-type clone could be blocked by substitutions in these positions.