Flaviviruses are a group of single-stranded, positive-sense RNA viruses causing ∼100 million infections per year. We have recently shown that flaviviruses produce a unique, small, noncoding RNA (∼0.5 kb) derived from the 3' untranslated region (UTR) of the genomic RNA (gRNA), which is required for flavivirus-induced cytopathicity and pathogenicity (G. P. Pijlman et al., Cell Host Microbe, 4: 579-591, 2008). This RNA (subgenomic flavivirus RNA [sfRNA]) is a product of incomplete degradation of gRNA presumably by the cellular 5'-3' exoribonuclease XRN1, which stalls on the rigid secondary structure stem-loop II (SL-II) located at the beginning of the 3' UTR. Mutations or deletions of various secondary structures in the 3' UTR resulted in the loss of full-length sfRNA (sfRNA1) and production of smaller and less abundant sfRNAs (sfRNA2 and sfRNA3). Here, we investigated in detail the importance of West Nile virus Kunjin (WNV(KUN)) 3' UTR secondary structures as well as tertiary interactions for sfRNA formation. We show that secondary structures SL-IV and dumbbell 1 (DB1) downstream of SL-II are able to prevent further degradation of gRNA when the SL-II structure is deleted, leading to production of sfRNA2 and sfRNA3, respectively. We also show that a number of pseudoknot (PK) interactions, in particular PK1 stabilizing SL-II and PK3 stabilizing DB1, are required for protection of gRNA from nuclease degradation and production of sfRNA. Our results show that PK interactions play a vital role in the production of nuclease-resistant sfRNA, which is essential for viral cytopathicity in cells and pathogenicity in mice.