Hepatitis C is a major public health problem in the United States and worldwide. Outbreaks of hepatitis C virus (HCV) infections are associated with unsafe injection practices, drug diversion, and other exposures to blood and are difficult to detect and investigate. Here, we developed and validated a simple approach for molecular detection of HCV transmissions in outbreak settings. We obtained sequences from the HCV hypervariable region 1 (HVR1), using end-point limiting-dilution (EPLD) technique, from 127 cases involved in 32 epidemiologically defined HCV outbreaks and 193 individuals with unrelated HCV strains. We compared several types of genetic distances and calculated a threshold, using minimal Hamming distances, that identifies transmission clusters in all tested outbreaks with 100% accuracy. The approach was also validated on sequences obtained using next-generation sequencing from HCV strains recovered from 239 individuals, and findings showed the same accuracy as that for EPLD. On average, the nucleotide diversity of the intrahost population was 6.2 times greater in the source case than in any incident case, allowing the correct detection of transmission direction in 8 outbreaks for which source cases were known. A simple and accurate distance-based approach developed here for detecting HCV transmissions streamlines molecular investigation of outbreaks, thus improving the public health capacity for rapid and effective control of hepatitis C.