Lentiviral vector (LV)-mediated gene transfer is a promising method of gene therapy. We previously reported that systemic injection of HIV-based LV triggers a transient inflammatory response. Here, we carried out studies to better characterize this response, and to develop a strategy to overcome the adverse effects of interferon (IFN) on LV-mediated gene transfer. We profiled gene expression in the liver after LV administration using deep-sequencing (RNA-seq), and identified several innate response pathways. We examined the response to LV in MyD88-TRIF knockout mice, which are incapable of toll-like receptor (TLR) signaling. Unexpectedly, the IFN response to LV was not reduced in the liver indicating that a non-TLR pathway can recognize LV in this organ. Indeed, blocking reverse transcription with azidothymidine (AZT) reduced the IFN response only in the liver, suggesting that proviral DNA can be a trigger. To block the inflammatory response, we pretreated mice with a short course of dexamethasone (Dex). At 4 hours post-treatment, all the IFN-induced genes were normalized. By blocking the inflammatory response, hepatocyte transduction was dramatically increased, which in turn doubled the level of human factor IX (FIX) produced by a hepatocyte-specific LV. Our studies uncover new insights into LV-induced immune responses in the liver, and provide a means to increase the safety and efficiency of LV-mediated gene transfer.