The V protein of the Paramyxovirus simian virus 5 (SV5) is a multifunctional protein containing an N-terminal 164 residue domain that is shared with the P protein and a distinct C-terminal domain that is cysteine-rich and which is highly conserved among Paramyxoviruses. We report the recovery from Vero cells [interferon (IFN) nonproducing cells] of a recombinant SV5 (rSV5) that lacks the V protein C-terminal specific domain (rSV5VDeltaC). In Vero cells rSV5VDeltaC forms large plaques and grows at a rate and titer similar to those of rSV5. In BHK or CV-1 cells rSV5VDeltaC forms small plaques and grows poorly. However, even when grown in Vero cells rSV5VDeltaC reverts to pseudo-wild-type virus in four to five passages, indicating the importance of the V protein for successful replication of SV5. Whereas rSV5 grows in many cell types with minimal cytopathic effect (CPE), rSV5VDeltaC causes extensive CPE in the same cell types. To overcome the antiviral state induced by IFN, many viruses have evolved mechanisms to counteract the effects of IFN by blocking the production of IFN and abrogating IFN signaling. Whereas rSV5 blocks IFN signaling by mediating the degradation of STAT1, rSV5VDeltaC does not cause the degradation of STAT1 and IFN signaling occurs through formation of the ISGF3 transcription complex. Furthermore, we find that rSV5 infection of cells prevents production of IFN-beta. The transcription factor IRF-3 which is required for transcription of the IFN-beta gene is not translocated from the cytoplasm to the nucleus in rSV5-infected cells. In contrast, in rSV5VDeltaC-infected cells IRF-3 is localized predominantly in the nucleus and IFN-beta is produced. By using ectopic expression of IRF-3, it was shown that after dsRNA treatment and expression of the V protein IRF-3 remained in the cytoplasm, whereas after dsRNA treatment and expression of the P protein (which lacks the C-terminal cysteine-rich domain) IRF-3 was localized predominantly in the nucleus. Thus, SV5 blocks two distinct pathways of the innate immune response, both of which require the presence of the C-terminal specific cysteine-rich domain of the multifunctional SV5 V protein.