CPI(+) and CPI(-) are two canine isolates of simian virus 5 (SV5). CPI(+) was originally isolated from the cerebrospinal fluid of a dog with temporary posterior paralysis and CPI(-) was recovered at 12 days p.i. from the brain tissue of a dog experimentally infected with CPI(+). We have previously shown that the V protein of SV5 blocks interferon (IFN) signalling by targeting STAT1 for degradation. Here we report that whilst CPI(+) targets STAT1 for degradation, CPI(-) fails to and as a consequence, CPI(+) blocks IFN signalling but CPI(-) does not. Three amino acid differences in the P/V N-terminal common domain of the V protein are responsible for the observed difference in the abilities of CPI(+) and CPI(-) to block IFN signalling. In cells persistently infected with CPI(-) the virus may become repressed in response to IFN, under which circumstances virus glycoproteins are lost from the surface of infected cells and virus nucleocapsid proteins accumulate in cytoplasmic inclusion bodies. We suggest that in vivo cells infected with IFN-resistant viruses (in which there would be continuous virus protein synthesis) may be more susceptible to killing by cytotoxic T cells than cells infected with IFN-sensitive viruses (in which virus protein synthesis was repressed), and a model of virus persistence is put forward in which there is alternating selection of IFN-resistant and IFN-sensitive viruses depending upon the state of the adaptive immune response.