The hepatitis C virus (HCV) infection is a leading cause of chronic liver disease. The moderate efficacy along with side effects of the current pegylated interferon and ribavirin combination therapy underscores the need for more effective and safer new treatment. In an effort to improve upon our current clinical candidate, Boceprevir (SCH 503034), extensive SAR studies were performed on the P3 capping moieties. This led to the discovery of tert-leucinol derived cyclic imides as a potent series of novel P3 capping groups. Thus, the introduction of these imide caps improved the cell-based replicon EC(90) by more than 10-fold. A number of imides with various substitutions, ring sizes, bicyclic systems, and heterocyclic rings were explored. The 4,4-dimethyl substituted glutarimide emerged as the best cap as exemplified in compound 21 (K(i)* = 4 nM, EC(90) = 40 nM). Systematic optimization of different positions (P', P3, and P1) of the inhibitor resulted in the identification of the lead compound 46, which had an excellent potency (K(i)* = 4 nM, EC(90) = 30 nM) and good pharmacokinetic profile (22% and 35% bioavailability in rats and dogs, respectively). X-ray structure of inhibitor 46 bound to the enzyme revealed that there was an additional hydrogen bonding interaction between one of the imide carbonyls and Cys159.