Understanding how hepatitis C virus (HCV) induces and circumvents the host's natural killer (NK) cell-mediated immunity is of critical importance in efforts to design effective therapeutics. We report here the decreased expression of the NKG2D activating receptor as a novel strategy adopted by HCV to evade NK-cell mediated responses. We show that chronic HCV infection is associated with expression of ligands for NKG2D, the MHC class I-related Chain (MIC) molecules, on hepatocytes. However, NKG2D expression is downmodulated on circulating NK cells, and consequently NK cell-mediated cytotoxic capacity and interferon-γ production are impaired. Using an endotoxin-free recombinant NS5A protein, we show that NS5A stimulation of monocytes through Toll-like Receptor 4 (TLR4) promotes p38- and PI3 kinase-dependent IL-10 production, while inhibiting IL-12 production. In turn, IL-10 triggers secretion of TGFβ which downmodulates NKG2D expression on NK cells, leading to their impaired effector functions. Moreover, culture supernatants of HCV JFH1 replicating Huh-7.5.1 cells reproduce the effect of recombinant NS5A on NKG2D downmodulation. Exogenous IL-15 can antagonize the TGFβ effect and restore normal NKG2D expression on NK cells. We conclude that NKG2D-dependent NK cell functions are modulated during chronic HCV infection, and demonstrate that this alteration can be prevented by exogenous IL-15, which could represent a meaningful adjuvant for therapeutic intervention.