Borna disease virus (BDV) is a non-segmented, negative-sense RNA virus and has the property of persistently infecting the cell nucleus. BDV encodes a 10-kDa non-structural protein, X, which is a negative regulator of viral polymerase activity but is essential for virus propagation. Recently, we have demonstrated that interaction of X with the viral polymerase cofactor, phosphoprotein (P), facilitates translocation of P from the nucleus to the cytoplasm. However, the mechanism by which the intracellular localization of X is controlled remains unclear. In this report, we demonstrate that BDV X interacts with the 71kDa molecular chaperon protein, Hsc70. Immunoprecipitation assays revealed that Hsc70 associates with the same region of X as P and, interestingly, that expression of P interferes competitively with the interaction between X and Hsc70. A heat shock experiment revealed that BDV X translocates into the nucleus, dependent upon the nuclear accumulation of Hsc70. Furthermore, we show that knockdown of Hsc70 by short interfering RNA decreases the nuclear localization of both X and P and markedly reduces the expression of viral genomic RNA in persistently infected cells. These data indicate that Hsc70 may be involved in viral replication by regulating the intracellular distribution of X.