Viruses have often evolved overlapping reading frames in order to maximize their coding capacity. Until recently, the segmented dsRNA genome of viruses of the Orbivirus genus was thought to be monocistronic, but the identification of the bluetongue virus (BTV) NS4 protein changed this assumption. A small ORF in segment 10, overlapping the NS3 ORF in the +1 position, is maintained in more than 300 strains of the 27 different BTV serotypes and in more than 200 strains of the phylogenetically related African horse sickness virus (AHSV). In BTV, this ORF (named S10-ORF2 in this study) encodes a putative protein 50-59 residues in length and appears to be under strong positive selection. HA- or GFP-tagged versions of S10-ORF2 expressed from transfected plasmids localized within the nucleoli of transfected cells, unless a putative nucleolar localization signal was mutated. S10-ORF2 inhibited gene expression, but not RNA translation, in transient transfection reporter assays. In both mammalian and insect cells, BTV S10-ORF2 deletion mutants (BTV8ΔS10-ORF2) displayed similar replication kinetics to wt virus. In vivo, S10-ORF2 deletion mutants were pathogenic in mouse models of disease. Although further evidence is required for S10-ORF2 expression during infection, the data presented provide an initial characterization of this ORF.