The role of the NS1 protein in modulating influenza A virulence and host range was assessed by adapting A/Hong Kong/1/1968 (H3N2) (HK-wt) to increased virulence in the mouse. Sequencing the NS genome segment of mouse-adapted variants revealed 11 mutations in the NS1 gene and 4 in the overlapping NEP gene. Using the HK-wt virus and reverse genetics to incorporate mutant NS gene segments, we demonstrated that all NS1 mutations were adaptive and enhanced virus replication (up to 100 fold) in mouse cells and/or lungs. All but one NS1 mutant was associated with increased virulence measured by survival and weight loss in the mouse. Ten of twelve NS1 mutants significantly enhanced IFN-β antagonism to reduce the level of IFN β production relative to HK-wt in infected mouse lungs at 1 day post infection, where 9 mutants induced viral yields in the lung that were equivalent to or significantly greater than HK-wt (up to 16 fold increase). Eight of 12 NS1 mutants had reduced or lost the ability to bind the 30 kDa cleavage and polyadenylation specificity factor (CPSF30) thus demonstrating a lack of correlation with reduced IFN β production. Mutant NS1 genes resulted in increased viral mRNA transcription (10 of 12 mutants), and protein production (6 of 12 mutants) in mouse cells. Increased transcription activity was demonstrated in the influenza mini-genome assay for 7 of 11 NS1 mutants. Although we have shown gain-of-function properties for all mutant NS genes, the contribution of the NEP mutations to phenotypic changes remains to be assessed. This study demonstrates that NS1 is a multifunctional virulence factor subject to adaptive evolution.