Genetic strategies that reduce or block pathogen transmission by mosquitoes have been proposed as a means of augmenting current control measures to reduce the growing burden of vector-borne diseases. The endosymbiotic bacterium Wolbachia has long been promoted as a potential vehicle for introducing disease-resistance genes into mosquitoes, thereby making them refractory to the human pathogens they transmit. Given the large overlap in tissue distribution and intracellular localization between Wolbachia and dengue virus in mosquitoes, we conducted experiments to characterize their interactions. Our results show that Wolbachia inhibits viral replication and dissemination in the main dengue vector, Aedes aegypti. Moreover, the virus transmission potential of Wolbachia-infected Ae. aegypti was significantly diminished when compared to wild-type mosquitoes that did not harbor Wolbachia. At 14 days post-infection, Wolbachia completely blocked dengue transmission in at least 37.5% of Ae. aegypti mosquitoes. We also observed that this Wolbachia-mediated viral interference was associated with an elevated basal immunity and increased longevity in the mosquitoes. These results underscore the potential usefulness of Wolbachia-based control strategies for population replacement.