Previous studies revealed that phenylmethimazole (C10) inhibits IRF3 signaling, preventing dsRNA-induction of type 1 interferon gene expression, production, and downstream signaling. In the present study, we investigated the molecular basis for C10 inhibition of dsRNA-stimulated IRF3 signaling. IRF-3 Trans-AM assays were used to measure C10 effects on dsRNA induction of IRF3 DNA binding. Green fluorescent protein-labeled IRF3 was used to measure C10 effects on dsRNA-induced IRF3 nuclear translocation. Native PAGE, SDS PAGE, and western blotting were used to identify effects of C10 on IRF3 homodimer formation and phosphorylation, respectively. There was a significant impairment of dsRNA-induced IRF3 DNA binding activity in human embryonic kidney and pancreatic cancer cells with C10 treatment. C10 also blocked dsRNA-induced IRF3 nuclear translocation and homodimer formation without blocking serine 396 phosphorylation of IRF3. Together, these results indicate that C10 interferes with IRF3 signaling by blocking dsRNA-induced IRF3 homodimer formation, a prerequisite for nuclear translocation and DNA binding activities.