The RNA-dependent RNA-polymerase NS5B is a key enzyme of the replication of hepatitis C virus (HCV) and a major therapeutic target. Applying a novel continuous assay with highly purified protein and a fluorescent RNA-template we provide a comprehensive mechanistic description of the enzymatic reaction. Using fluorescence spectroscopy, the HCV-polymerase was shown to bind template RNAs in a stepwise process that reflect substrate positioning. As demonstrated by circular dichroism and NMR spectroscopy, NTP(s) binding caused a tertiary structural change of the enzyme into an active conformation. Taking advantage of these tools, we analyzed the mechanism of action of the allosteric inhibitor HCV-796. Furthermore, while monitoring double-stranded RNA-product formation by real-time 1H NMR spectroscopy on a structured native RNA template, the processive polymerization reaction was preceded by a lag-phase. This data indicates that on the authentic folded HCV template, additional virus or host-encoded factors are required to support the HCV-polymerase and/or to remodel the template.