Borna disease virus polymerase activity is negatively regulated by the viral X protein. Using a virus minireplicon system it was found that all X mutants that no longer interacted with the viral P protein failed to exhibit significant inhibitory activity. The action of X could further be neutralized by expression of a P fragment that contained the X interaction domain but lacked all domains known to mediate interaction with other viral proteins. X thus appears to regulate the activity of the Borna disease virus polymerase by targeting the polymerase cofactor P.