The hepatitis C virus (HCV) is a flavivirus replicating in the cytoplasm of infected cells. The HCV genome is a single-stranded RNA encoding a polyprotein that is cleaved by cellular and viral proteases into 10 different products. While the structural proteins core protein, envelope protein 1 (E1) and E2 build up the virus particle, most nonstructural (NS) proteins are required for RNA replication. One of the least studied proteins is NS2, which is composed of a C-terminal cytosolic protease domain and a highly hydrophobic N-terminal domain. It is assumed that the latter is composed of three trans-membrane segments (TMS) that tightly attach NS2 to intracellular membranes. Taking advantage of a system to study HCV assembly in a hepatoma cell line, in this study we performed a detailed characterization of NS2 with respect to its role for virus particle assembly. In agreement with an earlier report ( Jones, C. T., Murray, C. L., Eastman, D. K., Tassello, J., and Rice, C. M. (2007) J. Virol. 81, 8374-8383 ), we demonstrate that the protease domain, but not its enzymatic activity, is required for infectious virus production. We also show that serine residue 168 in NS2, implicated in the phosphorylation and stability of this protein, is dispensable for virion formation. In addition, we determined the NMR structure of the first TMS of NS2 and show that the N-terminal segment (amino acids 3-11) forms a putative flexible helical element connected to a stable alpha-helix (amino acids 12-21) that includes an absolutely conserved helix side in genotype 1b. By using this structure as well as the amino acid conservation as a guide for a functional study, we determined the contribution of individual amino acid residues in TMS1 for HCV assembly. We identified several residues that are critical for virion formation, most notably a central glycine residue at position 10 of TMS1. Finally, we demonstrate that mutations in NS2 blocking HCV assembly can be rescued by trans-complementation.