Complex membrane structures induced by West Nile virus (WNV), an enveloped RNA virus, are required for efficient viral replication. How these membranes are induced and how they facilitate the viral life cycle are unknown. We show that WNV modulates host cell cholesterol homeostasis by upregulating cholesterol biosynthesis and redistributing cholesterol to viral replication membranes. Manipulating cholesterol levels and altering concentrations of cellular geranylgeranylated proteins had a deleterious effect on virus replication. Depletion of the key cholesterol-synthesizing enzyme 3-hydroxy-methyglutaryl-CoA reductase drastically hampered virus replication. Significantly, virus-induced redistribution of cellular cholesterol downregulated the interferon-stimulated Jak-STAT antiviral signaling response to infection. This defect could be partially restored by exogenous addition of cholesterol, which increased the ability of infected cells to respond to interferon. We propose that, by manipulating cellular cholesterol, WNV utilizes the cellular response to cholesterol deficiency and dependence of antiviral signaling pathways on cholesterol-rich microdomains to facilitate viral replication and survival.