We developed an in vitro translation extract from Krebs-2 cells that translates the entire open reading frame of the hepatitis C virus (HCV) strain H77 and properly processes the viral protein precursors when supplemented with canine microsomal membranes (CMMs). Translation of the C-terminal portion of the viral polyprotein in this system is documented by the synthesis of NS5B. Evidence for posttranslational modification of the viral proteins, the N-terminal glycosylation of E1 and the E2 precursor (E2-p7), and phosphorylation of NS5A is presented. With the exception of NS3, efficient generation of all virus-specific proteins is CMM dependent. A time course of the appearance of HCV products indicates that the viral polyprotein is cleaved cotranslationally. A competitive inhibitor of the NS3 protease inhibited accumulation of NS3, NS4B, NS5A, and NS5B, but not that of NS2 or structural proteins. CMMs also stabilized HCV mRNA during translation. Finally, the formyl-[35S]methionyl moiety of the initiator tRNAMet was incorporated exclusively into the core protein portion of the polyprotein, demonstrating that translation initiation in this system occurs with high fidelity.