We previously showed that a noncoding subgenomic flavivirus RNA (sfRNA) is required for viral pathogenicity, as a mutant West Nile virus (WNV) deficient in sfRNA production replicated poorly in wild-type mice. To investigate the possible immunomodulatory or immune evasive functions of sfRNA, we utilized mice and cells deficient in elements of the type I interferon (IFN) response. Replication of the sfRNA mutant WNV was rescued in mice and cells lacking interferon regulatory factor 3 (IRF-3) and IRF-7 and in mice lacking the type I alpha/beta interferon receptor (IFNAR), suggesting a contribution for sfRNA in overcoming the antiviral response mediated by type I IFN. This was confirmed by demonstrating rescue of mutant virus replication in the presence of IFNAR neutralizing antibodies, greater sensitivity of mutant virus replication to IFN-α pretreatment, partial rescue of its infectivity in cells deficient in RNase L, and direct effects of transfected sfRNA on rescuing replication of unrelated Semliki Forest virus in cells pretreated with IFN-α. The results define a novel function of sfRNA in flavivirus pathogenesis via its contribution to viral evasion of the type I interferon response.