We analyzed the functions of the influenza B virus nonstructural NS1-B protein, both by utilizing a constructed mutant virus (Delta NS1-B) lacking the NS1 gene and by testing the activities of the protein when expressed in cells. The mutant virus replicated to intermediate levels in 6-day-old embryonated chicken eggs that contain an immature interferon (IFN) system, whereas older eggs did not support viral propagation to a significant extent. The Delta NS1-B virus was a substantially stronger inducer of beta IFN (IFN-beta) transcripts in human lung epithelial cells than the wild type, and furthermore, transiently expressed NS1-B protein efficiently inhibited virus-dependent activation of the IFN-beta promoter. Interestingly, replication of the Delta NS1-B knockout virus was attenuated by more than 4 orders of magnitude in tissue culture cells containing or lacking functional IFN-alpha/beta genes. These findings show that the NS1-B protein functions as a viral IFN antagonist and indicate a further requirement of this protein for efficient viral replication that is unrelated to blocking IFN effects.