CD4⁺ T cell failure is a hallmark of chronic hepatitis C virus (HCV) infection. However, the mechanisms underlying the impairment and loss of virus-specific CD4⁺ T cells in persisting HCV infection remain unclear. Here we examined HCV-specific CD4⁺ T cells longitudinally during acute infection with different infection outcomes. We found that HCV-specific CD4⁺ T cells are characterized by expression of a narrower range of T cell inhibitory receptors compared with CD8⁺ T cells, with initially high expression levels of PD-1 and CTLA-4 that were associated with negative regulation of proliferation in all patients, irrespective of outcome. In addition, HCV-specific CD4⁺ T cells were phenotypically similar during early resolving and persistent infection and secreted similar levels of cytokines. However, upon viral control, CD4⁺ T cells quickly downregulated inhibitory receptors and differentiated into long-lived memory cells. In contrast, persisting viremia continued to drive T cell activation and PD-1 and CTLA-4 expression, and blocked T cell differentiation, until the cells quickly disappeared from the circulation. Our data support an important and physiological role for inhibitory receptor–mediated regulation of CD4⁺ T cells in early HCV infection, irrespective of outcome, with persistent HCV viremia leading to sustained upregulation of PD-1 and CTLA-4.