Production of alpha/beta interferon in response to viral double-stranded RNA (dsRNA) produced during viral replication is a first line of defense against viral infections. Here we demonstrate that the Erns glycoprotein of the pestivirus bovine viral diarrhea virus can act as an inhibitor of dsRNA-induced responses of cells. This effect is seen whether Erns is constitutively expressed in cells or exogenously added to the culture medium. The Erns effect is specific to dsRNA since activation of NF-kappaB in cells infected with Semliki Forest virus or treated with tumor necrosis factor alpha was not affected. We also show that Erns contains a dsRNA-binding activity, and its RNase is active against dsRNA at a low pH. Both the dsRNA binding and RNase activities are required for the inhibition of dsRNA signaling, and we discuss here a model to account for these observations.