Pathogens often suppress the melanization response of host insects, but the underlying molecular mechanisms are largely unknown. Here we report that Microplitis demolitor bracovirus (MdBV) carried by the wasp M. demolitor produces a protein, Egf1.0, which inhibits the phenoloxidase (PO) cascade. Egf1.0 belongs to a larger gene family that shares a cysteine-rich motif with similarities to the trypsin inhibitor-like (TIL) domains of small serine proteinase inhibitors (smapins). Gain-of-function and RNAi experiments indicated that the Egf genes are the only MdBV-encoded factors responsible for disabling the insect melanization response. Known smapins bind target proteinases in a substrate-like fashion and are cleaved at a single reactive site bond. The P1-P1' position for Egf1.0 has the sequence Arg-Phe, which suggested that its target proteinase is a prophenoloxidase-activating proteinase (PAP). Wild-type Egf1.0 inhibited PAP-3 from Manduca sexta, whereas Egf1.0(R51A), whose reactive-site arginine was replaced with an alanine, had no PAP-3 inhibitory activity. Other experiments using wild-type and mutant constructs indicated that Egf1.0 blocks activation of the PO cascade via PAP inhibition. Overall, our results identify a novel inhibitor of the PO cascade and indicate that suppression of the host melanization response is functionally important for both the virus and its associated wasp.