The majority of people infected with hepatitis C virus (HCV) fail to generate or maintain a T-cell response effective for viral clearance. Evidence from murine chronic viral infections shows that expression of the coinhibitory molecule PD-1 predicts CD8+ antiviral T-cell exhaustion and may contribute to inadequate pathogen control. To investigate whether human CD8+ T cells express PD-1 and demonstrate a dysfunctional phenotype during chronic HCV infection, peripheral and intrahepatic HCV-specific CD8+ T cells were examined. We found that in chronic HCV infection, peripheral HCV-specific T cells express high levels of PD-1 and that blockade of the PD-1/PD-L1 interaction led to an enhanced proliferative capacity. Importantly, intrahepatic HCV-specific T cells, in contrast to those in the periphery, express not only high levels of PD-1 but also decreased interleukin-7 receptor alpha (CD127), an exhausted phenotype that was HCV antigen specific and compartmentalized to the liver, the site of viral replication.