Small molecule HCV NS3 protease inhibitors such as boceprevir (SCH 503034) have shown antiviral activity as monotherapy and in combination with pegylated interferon-alpha and ribavirin in clinical trials. Improvement in inhibitor potency and pharmacokinetic properties offers opportunities to increase drug exposure and to further increase SVR. SAR exploration of ketoamide inhibitors related to boceprevir has led to the discovery of SCH 900518, a novel ketoamide protease inhibitor which forms a reversible covalent bond with the active site serine with an overall inhibition constant (Ki*) of 7 nM and dissociation half life of 1-2 hours. SCH 900518 inhibited replicon RNA with an EC90 of 40 nM. In biochemical assays, SCH 900518 was active against proteases of genotypes 1-3. A 2-week treatment with 5xEC90 of the inhibitor reduced replicon RNA by 3-log. Selection of replicon cells with SCH 900518 resulted in outgrowth of several resistant mutants (T54A/S, A156S/T/V). Cross-resistance studies demonstrated that the majority of mutations resistant to boceprevir and telaprevir caused similar fold loss of activity against all three inhibitors; however SCH 900518 retained more activity against these mutants due to its higher intrinsic potency. Combination treatment with interferon-alpha enhanced inhibition of replicon RNA and suppressed emergence of resistant replicon colonies, supporting the use of SCH 900518/peginterferon combination therapy in the clinic. In summary, the preclinical characterization of antiviral activity of SCH 900518 supports its evaluation in clinical studies.