A low-molecular-weight substance found naturally in mouse serum neutralizes mouse xenotropic C-type virus. It has no effect on endogenous ecotropic viruses. This neutralizing factor does not belong to the known immunogloblin classes, and its activity is not associated with the antivirus immunoglobulins that can be detected by radioimmunoprecipitation. Preparations of xenotropic virus absorb out this neutralizing activity in mouse sera. The specificity of this factor for X-tropic virus suggests that it represents a newly recognized type of response of the host to an endogenous virus. Its possible role in the regulation of endogenous C-type viruses is considered.