The parapoxvirus orf virus was resistant to type 1 (IFN-alpha) and type 2 (IFN-gamma) interferons in cultures of ovine cells. The recently identified orf virus OV20.0L gene exhibits 31% predicted amino acid identity to the vaccinia virus E3L interferon-resistance gene, and is referred to as the (putative) orf virus interferon-resistance gene (OVIFNR). The objective of this study was to determine whether OVIFNR was involved in interferon resistance. Recombinant OVIFNR as a thioredoxin fusion protein (OVIFNR-Tx) inhibited the activation (by autophosphorylation) of an interferon-inducible, double-stranded (ds) RNA-dependent kinase (PKR) of sheep, which was shown to bind dsRNA (poly I:C). PKR in other species is involved in the inhibition of protein synthesis as part of the antiviral state in infected cells. Virus-infected cell lysates, but not control lysates, from cells grown in the presence of cytosine arabinoside also contained PKR inhibitory activity, which indicated that the inhibitory activity was associated with early viral gene expression. Significantly, the OVIFNR gene expressed in interferon-treated ovine fibroblasts protected the unrelated Semliki Forest virus from the antiviral effect of both type 1 and type 2 interferons. Taken together, the results indicate that the OVIFNR gene functions as an interferon-resistance gene, the product of which inhibits PKR in a similar way to the vaccinia virus E3L gene product.