Nonobligate chain terminators, such as 2'-C-methylated nucleotides, block RNA synthesis by the RNA-dependent RNA polymerase (RdRp) of hepatitis C virus (HCV). Previous studies with related viral polymerases have shown that classical chain terminators lacking the 3'-hydroxyl group can be excised in the presence of pyrophosphate (PP(i)), which is detrimental to the inhibitory activity of these compounds. Here we demonstrate that the HCV RdRp enzyme is capable of removing both obligate and clinically relevant nonobligate chain terminators. Pyrimidines are more efficiently excised than are purines. The presence of the next complementary templated nucleotide literally blocks the excision of obligate chain terminators through the formation of a dead-end complex (DEC). However, 2'-C-methylated CMP is still cleaved efficiently under these conditions. These findings show that a 2'-methylated primer terminus impedes nucleotide binding. The S282T mutation, associated with resistance to 2'-C-methylated nucleotides, does not affect the excision patterns. Thus, the decreased susceptibility to 2'-C-methylated nucleotides appears to be based solely on improved discrimination between the inhibitor and its natural counterpart. In conclusion, our data suggest that the phosphorolytic excision of nonobligate, pyrimidine-based chain terminators can diminish their potency. The templated nucleotide does not appear to provide protection from excision through DEC formation.