The elimination of hepatitis C virus (HCV) in > 50% of chronically infected patients by treatment with IFN-α suggests that plasmacytoid dendritic cells (pDCs), major producers of IFN-α, play an important role in the control of HCV infection. However, despite large amounts of Toll-like receptor 7-mediated IFN-α, produced by pDCs exposed to HCV-infected hepatocytes, HCV still replicates in infected liver. Here we show that HCV envelope glycoprotein E2 is a novel ligand of pDC C-type lectin immunoreceptors (CLRs), blood DC antigen 2 (BDCA-2) and DC-immunoreceptor (DCIR). HCV particles inhibit, via binding of E2 glycoprotein to CLRs, production of IFN-α and IFN-λ in pDCs exposed to HCV-infected hepatocytes, and induce in pDCs a rapid phosphorylation of Akt and Erk1/2, in a manner similar to the crosslinking of BDCA-2 or DCIR. Blocking of BDCA-2 and DCIR with Fab fragments of monoclonal antibodies preserves the capacity of pDCs to produce type I and III IFNs in the presence of HCV particles. Thus, negative interference of CLR signaling triggered by cell-free HCV particles with Toll-like receptor signaling triggered by cell-associated HCV results in the inhibition of the principal pDC function, production of IFN.