For the benefit of planning for the future care and treatment of people infected with hepatitis C virus (HCV) and to help guide prevention and control programs, data are needed on HCV seroprevalence and associated risk factors. We conducted a cross-sectional sero-behavioral survey of injection drug users (IDU) detained for mandatory rehabilitation during a police sweep of Tehran, Iran, in early 2006. During the study period, a consecutive sample comprising 454 of 499 (91.0%) men arrested and determined to be IDU by urine test and physical examination consented to a face-to-face interview and blood collection for HCV antibody testing. Overall, HCV prevalence was 80.0% (95% confidence interval (CI) 76.2–83.6). Factors independently associated with HCV infection included history of incarceration (adjusted OR 4.35, 95% CI 1.88–10.08), age of first injection ≤25 years (OR 2.72, 95% CI 1.09–6.82), and history of tattooing (OR 2.33, 95% CI 1.05–5.17). HCV prevalence in this population of IDU upon intake to jail was extremely high and possibly approaching saturation. Findings support that incarceration is contributing to the increased spread of HCV infection in Iran and calls for urgent increased availability of HCV treatment, long-term preparation for the care of complications of chronic infection, and rapid scale-up of programs for the primary prevention of parenterally transmitted infections among drug users.