We previously showed that a noncoding subgenomic flavivirus RNA (sfRNA) is required for viral pathogenicity, as a mutant West Nile virus (WNV) deficient in sfRNA production replicated poorly in wild-type mice. To investigate the possible immunomodulatory or immune evasive functions of sfRNA, we utilized mice and cells deficient in elements of the type I interferon (IFN) response. Replication of the sfRNA mutant WNV was rescued in mice and cells lacking interferon regulatory factor 3 (IRF-3) and IRF-7 and in mice lacking the type I alpha/beta interferon receptor (IFNAR), suggesting a contribution for sfRNA in overcoming the antiviral response mediated by type I IFN. This was confirmed by demonstrating rescue of mutant virus replication in the presence of IFNAR neutralizing antibodies, greater sensitivity of mutant virus replication to IFN-alpha pretreatment, partial rescue of its infectivity in cells deficient in RNase L, and direct effects of transfected sfRNA on rescuing replication of unrelated Semliki Forest virus in cells pretreated with IFN-alpha. The results define a novel function of sfRNA in flavivirus pathogenesis via its contribution to viral evasion of the type I interferon response.