Japanese encephalitis virus (JEV) is a mosquito-borne viral zoonosis of public health importance. Global efforts have been made towards development of vaccine for prevention of Japanese encephalitis. The envelope protein of JEV is associated with viral binding to cellular receptors, membrane fusion, and the induction of protective neutralizing antibody response in hosts. Here we report that the antibodies raised against refolded domain III of envelope protein of JEV neutralize the JE virus and inhibit the JEV infection to Porcine Stable Kidney (PS) cells. A reverse transcriptase-PCR amplified gene encoding domain III of JEV envelope protein was cloned into pET28a+ vector and over expressed in E. coli. The recombinant JEV-DIII protein was purified by affinity chromatography under denaturing conditions. The rJEV-DIII was refolded by oxido-redux shuffle and purified to homogeneity by ion-exchange chromatography. Refolded rJEV-DIII was characterized using biochemical and biophysical methods. The polyclonal antibodies were raised against in vitro refolded rJEV-DIII protein in BALB/c mice with Freunds adjuvant. Ninety percent JEV is neutralized when the serum against refolded rJEV-DIII is used at a dilution of 1:80 as against 60.5% neutralization capacity with the same dilution of serum raised against denatured rJEV-DIII. The method of expression and purification of biologically functional rJEV-DIII protein described in this study may help in better understanding the biology of JE virus and the development of better vaccine candidate. Since the expression system uses E. coli as the heterologous host, the process is easy and amenable to inexpensive scale-up.