Signal transducers and activators of transcription 1 (STAT1) is activated by tyrosine phosphorylation upon interferon-gamma (IFN-gamma) stimulation. Phosphorylated STAT1 translocates into nucleus to initiate the transcription of IFN-gamma target genes that are important in mediating antiviral, antiproliferative, and immune response. The inactivation of STAT1 is mainly accomplished via tyrosine dephosphorylation by the nuclear isoform of T cell protein tyrosine phosphatase (TC45) in nucleus. Here we show that beta-arrestin1 directly interacts with STAT1 in nucleus after IFN-gamma treatment and accelerates STAT1 tyrosine dephosphorylation by recruiting TC45. Consequently, beta-arrestin1 negatively regulates STAT1 transcription activity as well as the IFN-gamma-induced gene transcription. Application of beta-arrestin1 siRNA significantly enhances IFN-gamma-induced antiviral response in vesicular stomatitis virus (VSV)-infected cells. Our results reveal that nuclear beta-arrestin1, acting as a scaffold for the dephosphorylation of STAT1, is an essential negative regulator of IFN-gamma signaling and participates in the IFN-gamma-induced cellular antiviral response.