Monocytes and macrophages (MPhis) play a central role in the pathogenesis of chronic hepatitis C virus (HCV) infection. The tissue microenvironment triggers monocyte differentiation into MPhis, with polarization ranging within the spectrum of M1 (classical) to M2 (alternative) activation. Recently, we demonstrated that HCV infection leads to monocyte differentiation into polarized MPhis that mediate stellate cell activation via TGF-beta. In this study, we aimed to identify the viral factor(s) that mediate monocyte-to-MPhi differentiation. We performed coculture experiments using healthy monocytes with exosome-packaged HCV, cell-free HCV, or HCV ssRNA. Coculture of monocytes with exosome-packaged HCV, cell-free HCV, or HCV ssRNA induced differentiation into MPhis with high M2 surface marker expression and production of pro- and anti-inflammatory cytokines. The HCV ssRNA-induced monocyte activation and differentiation into MPhis could be prevented by TLR7 or TLR8 knockdown. Furthermore, TLR7 or TLR8 stimulation, independent of HCV, caused monocyte differentiation and M2 MPhi polarization. In vivo, in chronic HCV-infected patients, we found increased expression of TLR7/8 in circulating monocytes that was associated with increased intracellular expression of procollagen. Furthermore, knockdown of TLR8 completely attenuated collagen expression in monocytes exposed to HCV, and knockdown of TLR7 partially attenuated this expression, suggesting roles for TLR7/8 in induction of fibrocytes in HCV infection. We identified TLR7/8 as mediators of monocyte differentiation and M2 MPhi polarization during HCV infection. Further, we demonstrated that HCV ssRNA and other TLR7/8 ligands promote MPhi polarization and generation of circulating fibrocytes.