The interferon system is the first line of defense against viral infection in mammals. This system is designed to block the spread of virus infection in the body, sometimes at the expense of accelerating the death of the infected cells. As expected of potent cytokines, in addition to their antiviral effects, interferons have profound effects on many aspects of cell physiology. All these actions of interferons are mediated by hundreds of interferon-induced proteins that are usually not synthesized in resting cells. Interferons induce their synthesis by activating the Jak-STAT pathways, a paradigm of cell signaling used by many cytokines and growth factors. Surprisingly, some of the same genes can also be induced directly by viruses and double-stranded RNA, a common viral by-product. Some of the interferon-induced proteins have novel biochemical properties and some are inactive as such but can be activated by double-stranded RNA produced during virus infection. Finally, almost all viruses have evolved mechanisms to evade the interferon system by partially blocking interferon synthesis or interferon action. Thus, in nature interferons and viruses maintain an equilibrium that allows regulated viral replication.