In anticipation of large-scale smallpox vaccination, clinical trials of new vaccine candidates with improved safety profiles, and new vaccinia immune globulin (VIG) products, there is an immediate need to develop new assays to measure vaccinia-specific immune responses. The classical assay to measure vaccinia neutralization, the plaque-reduction neutralization test (PRNT), is slow, labor intensive, and difficult to validate and transfer. Here we describe the development of a novel vaccinia-neutralization assay based on the expression of a reporter gene, beta-galactosidase (beta-Gal). Using a previously constructed vaccinia-beta-Gal recombinant virus, vSC56, we developed a neutralization assay that is rapid, sensitive, and reproducible. The readout is automated. We show that the neutralizing titers, ID(50), for several VIG products measured by our assay were similar to those obtained by PRNTs. A new Food and Drug Administration VIG standard was established for distribution to other laboratories. The new assay will serve as an important tool both for preclinical and clinical trials of new smallpox vaccines and for evaluation of therapeutic agents to treat vaccine-associated adverse reactions.