Vesicular stomatitis virus (VSV) is a rhabdovirus which causes acute encephalitis in mice after intranasal infection. Because type I interferon (IFN) has been shown to be a potent inhibitor of VSV, we investigated the role of type I IFN in viral replication in neurons in culture. Pre-treatment of NB41A3 neuroblastoma cells or primary neuron cultures with IFN-beta or IFN-alpha strongly inhibits virus replication, with 1000-fold inhibition of infectious virus release occurring at 7 h post-infection, and maximum inhibition of 14,000-fold occurring at 14 h. Type I IFN inhibited both viral protein and RNA synthesis, but not enough to account for the inhibition of infectious virus yield. The influenza virus protein NS1 binds dsRNA and antagonizes induction of PKR activity, an IFN-inducible antiviral protein which phosphorylates and inactivates the elongation factor eIF-2alpha, resulting in cessation of translation. In NS1-expressing neuroblastoma cells, VSV replication was inhibited by IFN-beta as well as in control NB41A3 cells, and eIF-2alpha phosphorylation was blocked, suggesting that PKR activity was not involved in inhibition of viral protein synthesis. Similarly, inhibition of VSV by IFN-beta was not affected by addition of inhibitors of nitric oxide synthase, indicating that IFN-beta activity is not mediated by nitric oxide or superoxide. This contrasts with the essential role of NOS-1 in inhibition of VSV replication when neurons are treated with IFN-gamma. Analysis of cell culture supernatants revealed suppression of release of VSV particles from both NB41A3 cells and primary neurons treated with IFN. The inhibition of virion release closely matched the overall suppression of infectious VSV particle release, suggesting that type I IFN plays a role in inhibition of VSV assembly.