SUMMARYAlthough high hepatitis C virus (HCV) prevalence has been observed in people who inject drugs (PWID) for decades, research suggests incidence is falling. We examined whether PWIDs’ use of opioid substitution therapy (OST) and their needle-and-syringe sharing behaviour explained HCV incidence. We assessed HCV incidence in 235 PWID in Melbourne, Australia, and performed discrete-time survival with needle-sharing and OST status as independent variables. HCV infection, reinfection and combined infection/reinfection incidences were 7·6 [95% confidence interval (CI) 4·8–11·9], 12·4 (95% CI 9·1–17·0) and 9·7 (95% CI 7·4–12·6) per 100 person-years, respectively. Needle-sharing was significantly associated with higher incidence of naive HCV infection [hazard ratio (HR) 4·9, 95% CI 1·3–17·7] but not reinfection (HR 1·85, 95% CI 0·79–4·32); however, a cross-model test suggested this difference was sample specific. Past month use of OST had non-significant protective effects against naive HCV infection and reinfection. Our data confirm previous evidence of greatly reduced HCV incidence in PWID, but not the significant protective effect of OST on HCV incidence detected in recent studies. Our findings reinforce the need for greater access to HCV testing and prevention services to accelerate the decline in incidence, and HCV treatment, management and support to limit reinfection.