Recent reports of a novel group of flaviviruses that replicate only in mosquitoes and appear to spread through insect populations via vertical transmission have emerged from around the globe. To date, there is no information on the presence or prevalence of these insect-specific flaviviruses (ISFs) in Australian mosquito species. To assess whether such viruses occur locally, we used reverse transcription-polymerase chain reaction (RT-PCR) and flavivirus universal primers that are specific to the NS5 gene to detect these viruses in mosquito pools collected from the Northern Territory. Of 94 pools of mosquitoes, 13 were RT-PCR positive, and of these, 6 flavivirus isolates were obtained by inoculation of mosquito cell culture. Sequence analysis of the NS5 gene revealed that these isolates are genetically and phylogenetically similar to ISFs reported from other parts of the world. The entire coding region of one isolate (designated 56) was sequenced and shown to have approximately 63.7% nucleotide identity and 66.6% amino acid identity with its closest known relative (Nakiwogo virus) indicating that the prototype Australian ISF represents a new species. All isolates were obtained from Coquillettidia xanthogaster mosquitoes. The new virus is tentatively named Palm Creek virus (PCV) after its place of isolation. We also demonstrated that prior infection of cultured mosquito cells with PCV suppressed subsequent replication of the medically significant West Nile and Murray Valley encephalitis viruses by 10-43 fold (1 to 1.63 log) at 48 hr post-infection, suggesting that superinfection exclusion can occur between ISFs and vertebrate-infecting flaviviruses despite their high level of genetic diversity. We also generated several monoclonal antibodies (mAbs) that are specific to the NS1 protein of PCV, and these represent the first ISF-specific mAbs reported to date.