Hepatitis C Virus (HCV) infection is the major cause of chronic liver disease, leading to cirrhosis and hepatocellular carcinoma, which affects more than 200 million people worldwide. Currently the only therapeutic regimens are subcutaneous interferon-alpha or PEG-interferon alone or in combination with oral ribavirin. Although combination therapy is reasonably successful with the majority of genotypes, its efficacy against the predominant genotype (genotype 1) is moderate at best, with only approximately 50% of the patients showing sustained virological response. We recently disclosed the discovery of Boceprevir, SCH 503034 (1), which is a novel, potent, selective, orally bioavailable NS3 protease inhibitor that has been shown to be efficacious in humans and is currently undergoing clinical trials. As second generation compounds, we have further explored various novel structures with the aim of improving enzyme and cellular binding activities of 1. Herein, we disclose our efforts toward the identification of a novel P(3) sulfonamide-capped inhibitor that demonstrated improved binding and cellular activity compared to 1. X-ray structure of one of these inhibitors bound to the enzyme revealed a hydrogen bond of the P(3) sulfonamide group to Cys-159 which resulted in improved binding and cellular potency.