The present invention concerns the development of a cell-based assay system having improved sensitivity to HCV NS3 protease activity when compared to known assays, which is useful for screening test compounds capable of modulating (particularly inhibiting) HCV NS3 protease activity. This system provides a first construct comprising a transactivator domain joined downstream of the NS3 5 domains of HCV under the control of a non-cytopathic viral promoter system. A second construct is also provided that comprises a reporter gene under the control of an operator sensitive to the binding of the transactivator. The NS3 5 domains encodes the NS3 polyprotein which comprises: the NS3 protease, followed by the NS4A co-factor, the NS4B and NS5A proteins (including any derivative, variant or fragment thereof), terminated by the NS5B protein (including any derivative, variant or fragment thereof) sufficient to constitute a NS5A/5B cleavage site. The transactivator, when expressed and released from the polyprotein initiates transcription and expression of the reporter gene that is measurable.