The hepatitis C virus (HCV) infects approximately three percent of the world's population. Some individuals resolve the infection spontaneously, but the majority develop persistent viremia that often causes progressive liver disease. There is an emerging consensus that cellular immune responses are essential for spontaneous resolution of acute hepatitis C and long-term protection from persistent infection. This review focuses on the recent advances in understanding mechanisms of protective immunity and why they fail in most infected individuals. The distinct yet complementary role of CD4+ and CD8+ T lymphocytes in this process is highlighted.