Alcohol exposure worsens the course and outcomes of hepatitis C virus (HCV) infection. Activation of protective antiviral genes is induced by IFN-a signaling, which is altered in liver cells by either HCV or ethanol exposure. However, the mechanisms of the combined effects of HCV and ethanol metabolism in IFN-a signaling modulation are not well elucidated. Here, we explored a possibility that ethanol metabolism potentiates HCV-mediated dysregulation of IFN-a signaling in liver cells via impairment of methylation reactions. HCV-infected Huh7.5 CYP2E1(+) cells and human hepatocytes were exposed to acetaldehyde (Ach)-generating system (AGS) and stimulated with IFN-a to activate IFN-sensitive genes (ISG) via the Jak-STAT-1 pathway. We observed significant suppression of signaling events by Ach. Ach exposure decreased STAT-1 methylation via activation of protein phosphatase 2A and increased the protein inhibitor of activated STAT-1 (PIAS-1)-STAT-1 complex formation in both HCV(+) and HCV(-) cells, preventing ISG activation. Treatment with a promethylating agent, betaine, attenuated all examined Ach-induced defects. Ethanol metabolism-induced changes in ISGs are methylation related and confirmed by in vivo studies on HCV(+) transgenic mice. HCV- and Ach-induced impairment of IFN signaling temporarily increased HCV RNA levels followed by apoptosis of heavily infected cells. We concluded that Ach potentiates the suppressive effects of HCV on activation of ISGs attributable to methylation-dependent dysregulation of IFN-a signaling. A temporary increase in HCV RNA sensitizes the liver cells to Ach-induced apoptosis. Betaine reverses the inhibitory effects of Ach on IFN signaling and thus can be used for treatment of HCV(+) alcohol-abusing patients