The hepatitis C virus (HCV) RNA-dependent RNA polymerase (RdRp), represented by nonstructural protein 5B (NS5B), belongs to a class of integral membrane proteins termed tail-anchored proteins. Its membrane association is mediated by the C-terminal 21 amino acid residues, which are dispensable for RdRp activity in vitro. For this study, we investigated the role of this domain, termed the insertion sequence, in HCV RNA replication in cells. Based on a structural model and the amino acid conservation among different HCV isolates, we designed a panel of insertion sequence mutants and analyzed their membrane association and RNA replication. Subgenomic replicons with a duplication of an essential cis-acting replication element overlapping the sequence that encodes the C-terminal domain of NS5B were used to unequivocally distinguish RNA versus protein effects of these mutations. Our results demonstrate that the membrane association of the RdRp is essential for HCV RNA replication. Interestingly, certain amino acid substitutions within the insertion sequence abolished RNA replication without affecting membrane association, indicating that the C-terminal domain of NS5B has functions beyond serving as a membrane anchor and that it may be involved in critical intramembrane protein-protein interactions. These results have implications for the functional architecture of the HCV replication complex and provide new insights into the expanding spectrum of tail-anchored proteins.