Impaired T‐cell responses in chronic hepatitis C virus (HCV) patients have been reported to be associated with the establishment of HCV persistent infection. However, the mechanism for HCV‐mediated T‐cell dysfunction is yet to be defined. Myeloid‐derived suppressor cells (MDSCs) play a pivotal role in suppressing T‐cell responses. In this study we examined the accumulation of MDSCs in human peripheral blood mononuclear cells (PBMCs) following HCV infection. We found that CD33⁺ mononuclear cells cocultured with HCV‐infected hepatocytes, or with HCV core protein, suppress autologous T‐cell responses. HCV core‐treated CD33⁺ cells exhibit a CD14⁺CD11b^+/lowHLADR^−/low phenotype with up‐regulated expression of p47^phox, a component of the NOX2 complex critical for reactive oxygen species (ROS) production. In contrast, immunosuppressive factors, arginase‐1 and inducible nitric oxide synthase (iNOS), were not up‐regulated. Importantly, treatment with an inactivator of ROS reversed the T‐cell suppressive function of HCV‐induced MDSCs. Lastly, PBMCs of chronic HCV patients mirror CD33⁺ cells following treatment with HCV core where CD33⁺ cells are CD14⁺CD11b⁺HLADR^−/low, and up‐regulate the expression of p47^phox. Conclusion: These results suggest that HCV promotes the accumulation of CD33⁺ MDSC, resulting in ROS‐mediated suppression of T‐cell responsiveness. Thus, the accumulation of MDSCs during HCV infection may facilitate and maintain HCV persistent infection. (HEPATOLOGY 2012)