Borna disease virus infection of neonatal rats results in a characteristic behavioral syndrome and apoptosis of subsets of neurons in the hippocampus and cerebellum (neonatal Borna disease [NBD]). The cellular mechanisms leading to neurodevelopmental damage in NBD have not been fully elucidated. Insights into this model may have general implications for understanding the pathogenesis of virus-associated neurodevelopmental damage. Here we report the presence of endoplasmic reticulum (ER) stress markers and activation of the unfolded protein response in the NBD hippocampus and cerebellum. Specific findings included enhanced PERK-mediated phosphorylation of eif2alpha and concomitant regulation of ATF4 translation; IRE1-mediated splicing of XBP1 mRNA; and cleavage of the ATF6 protein in NBD rat brains. We found evidence for regional and cell type-specific divergence in the expression of ER stress-induced proapoptotic and quality control signals. Our results demonstrate that ER stress induction in death-susceptible Purkinje neurons in NBD is associated with the expression of the proapoptotic molecule CHOP in the absence of compensatory expression of the ER quality control molecules Bip and protein disulfide isomerase. In contrast, ER stress in death-resistant astrocytes is associated with complementary expression of CHOP and ER quality control signals. These results implicate an imbalance between ER stress-mediated apoptosis and survival signaling as a critical determinant of neural cell fate in NBD.