Inflammation in HIV infection is predictive of non-AIDS morbidity and death, higher set point plasma virus load and virus acquisition; thus, therapeutic agents are in development to reduce its causes and consequences. However, inflammation may simultaneously confer both detrimental and beneficial effects. This dichotomy is particularly applicable to type I interferons (IFN-I) which, while contributing to innate control of infection, also provide target cells for the virus during acute infection, impair CD4 T-cell recovery, and are associated with disease progression. Here we manipulated IFN-I signalling in rhesus macaques (Macaca mulatta) during simian immunodeficiency virus (SIV) transmission and acute infection with two complementary in vivo interventions. We show that blockade of the IFN-I receptor caused reduced antiviral gene expression, increased SIV reservoir size and accelerated CD4 T-cell depletion with progression to AIDS despite decreased T-cell activation. In contrast, IFN-α2a administration initially upregulated expression of antiviral genes and prevented systemic infection. However, continued IFN-α2a treatment induced IFN-I desensitization and decreased antiviral gene expression, enabling infection with increased SIV reservoir size and accelerated CD4 T-cell loss. Thus, the timing of IFN-induced innate responses in acute SIV infection profoundly affects overall disease course and outweighs the detrimental consequences of increased immune activation. Yet, the clinical consequences of manipulation of IFN signalling are difficult to predict in vivo and therapeutic interventions in human studies should be approached with caution.