A cell-based assay system in which the detection of the reporter gene activity, or secreted alkaline phosphatase (SEAP), is dependent upon the protease activity of the Hepatitis C virus NS3 gene product. This system can be used to assess the activity of candidate protease inhibitors in a mammalian cell-based assay system. The assay system is simpler than previously described assays due to the use of SEAP which allows the reporter gene activity to be quantified by measuring the amount of secreted gene product in the cell media by monitoring the conversion of luminescent or calorimetric alkaline phosphatase substrate.