The immuno-pathogenic mechanisms of chronic hepatitis C virus (HCV) infection remain to be elucidated and pose a major hurdle in treating or preventing chronic HCV-induced advanced liver diseases such as cirrhosis. Macrophages are a major component of the inflammatory milieu in chronic HCV–induced liver disease, and are generally derived from circulating inflammatory monocytes; however very little is known about their role in liver diseases. To investigate the activation and role of macrophages in chronic HCV–induced liver fibrosis, we utilized a recently developed humanized mouse model with autologous human immune and liver cells, human liver and blood samples and cell culture models of monocyte/macrophage and/or hepatic stellate cell activation. We showed that M2 macrophage activation was associated with liver fibrosis during chronic HCV infection in the livers of both humanized mice and patients, and direct-acting antiviral therapy attenuated M2 macrophage activation and associated liver fibrosis. We demonstrated that supernatant from HCV-infected liver cells activated human monocytes/macrophages with M2-like phenotypes. Importantly, HCV-activated monocytes/macrophages promoted hepatic stellate cell activation. These results suggest a critical role for M2 macrophage induction in chronic HCV-associated immune dysregulation and liver fibrosis.