A sustained response to standard interferon therapy for chronic hepatitis C has been demonstrated in no more than 25% of patients. To improve interferon alfa (IFN‐α) antiviral effect, a number of combination therapies with IFNs plus other drugs have been proposed for both relapser and nonresponder hepatitis C virus (HCV)‐infected patients. Although the causes of IFN resistance in subsets of HCV‐infected patients are unknown, both viral and host factors have been involved, including defects in IFN signal transduction and IFN‐α/β receptor down‐regulation. Here, we report that nonsteroidal anti‐inflammatory drugs (NSAIDs), which have been proposed for IFN‐α combination therapy in nonresponders, potentiate IFN‐α signaling. We found that, in the hepatoma cell lines, CCL13/Chang and HepG2, indomethacin, a selective cyclo‐oxygenase 1 and 2 (COX‐1 and COX‐2) inhibitor, increases IFN‐α stimulation of interferon‐stimulated response element (ISRE)‐dependent transcription in a dose‐dependent manner. Interestingly, maximal potentiation was observed with suboptimal IFN‐α concentrations. Indomethacin exerts its effects by synergizing with IFN‐α in inducing STAT1 activation by phosphorylation, without affecting concurrent Jak1 phosphorylation. Our data indicate that blockade of arachidonic acid (AA) metabolism by indomethacin activates a signaling pathway that converges on STAT1 activation to potentiate IFN‐α–dependent gene activation.