Hepatitis C virus (HCV) is predominantly transmitted between persons who inject drugs. For this population, global prevalence of HCV infection is high and incarceration is common and an independent risk factor for HCV acquisition. To explore HCV transmission dynamics in incarcerated populations, we integrated virus sequences with risk behavior and spatiotemporal data and analyzed transmission clusters among prisoners in Australia. We detected 3 clusters of recent HCV transmission consisting of 4 likely in-custody transmission events involving source/recipient pairs located in the same prison at the same time. Of these 4 events, 3 were associated with drug injecting and equipment sharing. Despite a large population of prisoners with chronic HCV, recent transmission events were identified in the prison setting. This ongoing HCV transmission among high-risk prisoners argues for expansion of prevention programs to reduce HCV transmission in prisons.