A prospective study in three Egyptian villages (A, B and C) having a high prevalence of hepatitis C virus (HCV) infection examined incidence of community-acquired HCV infection in children; 2852 uninfected infants were prospectively followed from birth for up to 5.5 years. Fifteen seroconverted for either HCV antibodies and/or HCV-RNA (incidence of 0.53%). Ten had both anti-HCV and HCV-RNA; four had only anti-HCV; and one had HCV-RNA in the absence of antibody. The incidence rate at all ages was 2.7/1000 person-years (PY). It was 3.8/1000 PY during infancy and 2.0/1000 PY for the 1-5-years age group. Hospitalization and low birth weight increased the risk of infection; while living in village B, the family having a higher socioeconomic status, and advanced maternal education were protective. Six of eight HCV-infected infants reported iatrogenic exposures (e.g. hospitalization, therapeutic injections, ear piercing) prior to infection whereas only 2/7 children older than 1 year reported these exposures. Having an HCV-positive mother was the only other reported risk in two of these older children. The virus cleared in six (40%) children by the end of follow-up. Health education targeting iatrogenic exposures and focusing on risk factors could reduce HCV infection in children in high-risk populations.