The recent emergence of several new coronaviruses, including the etiological cause of severe acute respiratory syndrome, has significantly increased the importance of understanding virus-host cell interactions of this virus family. We used mouse hepatitis virus (MHV) A59 as a model to gain insight into how coronaviruses affect the type I alpha/beta interferon (IFN) system. We demonstrate that MHV is resistant to type I IFN. Protein kinase R (PKR) and the alpha subunit of eukaryotic translation initiation factor are not phosphorylated in infected cells. The RNase L activity associated with 2',5'-oligoadenylate synthetase is not activated or is blocked, since cellular RNA is not degraded. These results are consistent with lack of protein translation shutoff early following infection. We used a well-established recombinant vaccinia virus (VV)-based expression system that lacks the viral IFN antagonist E3L to screen viral genes for their ability to rescue the IFN sensitivity of the mutant. The nucleocapsid (N) gene rescued VVDeltaE3L from IFN sensitivity. N gene expression prevents cellular RNA degradation and partially rescues the dramatic translation shutoff characteristic of the VVDeltaE3L virus. However, it does not prevent PKR phosphorylation. The results indicate that the MHV N protein is a type I IFN antagonist that likely plays a role in circumventing the innate immune response.