Natural killer (NK) cells play an important role in early defense against viral infection. The cytotoxic activity of NK cells is increased by interferon-alpha/beta (IFN-alpha/beta), produced en masse in virally infected cells. However, the mechanism(s) by which IFN-alpha/beta contribute to the NK-cell-mediated antiviral response is not well understood. Here we provide evidence that the cytotoxicity of NK cells is enhanced by IFN-alpha/beta through induction of TNF-related apoptosis-inducing ligand (TRAIL). Isolation and analysis of the murine TRAIL promoter revealed the presence of an IFN-stimulated response element (ISRE), which binds to the transcription factor ISGF3 (interferon stimulated gene factor-3). This promoter is indeed activated by IFN-beta in ISGF3-dependent manner. We also show that virally infected cells, but not uninfected cells, are susceptible to TRAIL-mediated cytotoxicity in vitro, and that the TRAIL expressed in NK cells is indeed crucial in limiting virus replication in vivo. Thus, our study reveals a new molecular link between IFN-alpha/beta signaling and activation of NK cells in antiviral response of the host.