The M128L myxoma virus gene expresses a five-membrane spanning cell surface protein with significant amino acid homology to the cellular CD47 proteins. CD47, also called integrin-associated protein (IAP), is associated with the modulation of leukocyte adhesion, motility, activation, and phagocytosis. Creation of an M128L-deletion mutant myxoma virus strain and subsequent infection of the European rabbit demonstrated that M128L is necessary for the production of a lethal infection in susceptible rabbits, while it is fully dispensable for virus replication in vitro. Secondary sites of infection developed on the majority of rabbits infected with the M128L-deletion mutant (vMyx128KO), demonstrating that the M128L protein is nonessential for the dissemination of virus within the host. Although the size and severity of the primary lesions on vMyx128KO-infected rabbits were comparable to rabbits infected with the wild-type virus at the early stages of disease progression, by day 7 the reduced virulence of the vMyx128KO virus was clearly evident and all of the animals recovered from infection by the M128L-knockout virus. Histological analysis of the tissues of vMyx128KO-infected rabbits revealed greater activation of monocyte/macrophage cells in infected and/or lymphoid tissues when compared to those of wild-type myxoma-infected rabbits. We conclude that the M128L protein is a novel CD47-like immunomodulatory gene of myxoma virus required for full pathogenesis of the virus in the European rabbit and that its loss from the virus results in increased activation of monocyte/macrophage cells during infection.