The variability of the hepatitis C virus (HCV), which likely contributes to immune escape, is most pronounced in hypervariable region 1 (HVR1) of viral envelope protein 2. This domain is the target for neutralizing antibodies, and its deletion attenuates replication in vivo. Here we characterized the relevance of HVR1 for virus replication in vitro using cell culture-derived HCV. We show that HVR1 is dispensable for RNA replication. However, viruses lacking HVR1 (Delta HVR1) are less infectious, and separation by density gradients revealed that the population of Delta HVR1 virions comprises fewer particles with low density. Strikingly, Delta HVR1 particles with intermediate density (1.12 g/ml) are as infectious as wild-type virions, while those with low density (1.02 to 1.08 g/ml) are poorly infectious, despite quantities of RNA and core similar to those in wild-type particles. Moreover, Delta HVR1 particles exhibited impaired fusion, a defect that was partially restored by an E1 mutation (I347L), which also rescues infectivity and which was selected during long-term culture. Finally, Delta HVR1 particles were no longer neutralized by SR-B1-specific immunoglobulins but were more prone to neutralization and precipitation by soluble CD81, E2-specific monoclonal antibodies, and patient sera. These results suggest that HVR1 influences the biophysical properties of released viruses and that this domain is particularly important for infectivity of low-density particles. Moreover, they indicate that HVR1 obstructs the viral CD81 binding site and conserved neutralizing epitopes. These functions likely optimize virus replication, facilitate immune escape, and thus foster establishment and maintenance of a chronic infection.