RNA interference (RNAi) drives powerful antiviral immunity in plants and animals so that many viruses must express viral suppressor of RNAi (VSR) to establish virulent infection. However, little is known about the immune responses conferring resistance against viruses that have evolved the counter-defensive strategy to suppress antiviral RNAi. In this study, we discover that Drosophila cells infected with Drosophila C virus (DCV), a natural viral pathogen of Drosophila known to harbor a potent VSR, exhibit heightened expression of circular RNA circZfh1. circZfh1 confers virus resistance in the presence of viral suppression of antiviral RNAi. Furthermore, we validate that circZfh1 encodes a 274-amino acid protein, CRAV, essential for its antiviral activity. Notably, CRAV differs from its parental Zfh1 gene in a different reading frame, with the C-terminal 69 amino acids unique to CRAV. Our analysis also reveals the presence of CRAV in species within the melanogaster subgroup, with the C-terminal unique fragment undergoing accelerated evolution. Expression of CRAV upregulates the expression of the cytokine Upd3, which binds to its receptor, stimulating the JAK-STAT pathway and enhancing the immune response to DCV infection. Notably, CRISPR/Cas9 knockout of circZfh1 significantly enhances DCV replication in vitro and in vivo, with circZfh1-knockout adult flies displaying heightened disease susceptibility to DCV. In summary, our findings unveil a Drosophila protein-coding circular RNA that activates an innate immune signaling pathway crucial for virus resistance following the suppression of antiviral RNAi by viruses, thereby elucidating a novel counter-defensive strategy.IMPORTANCEEukaryotic hosts possess a complex, multilayered immune system that guards against pathogen invasion. In fruit flies, RNA interference (RNAi) drives robust antiviral immunity, prompting many viruses to express viral suppressors of RNAi (VSRs) to establish virulent infections. However, little is known about immune responses that confer resistance against viruses with potent VSRs. In this study, we discovered that Drosophila cells infected with Drosophila C virus (DCV), a natural viral pathogen possessing a potent VSR, upregulated the expression of circular RNA circZfh1. circZfh1 exhibits DCV-specific antiviral activity, encoding a 274-amino acid protein, CRAV, crucial for its antiviral effects. As a different reading frame from its parental Zfh1 gene, the C-terminal 69 amino acids are unique to CRAV, undergoing faster evolution. CRAV activates the JAK-STAT pathway, enhancing the immune response to DCV infection. Therefore, our work uncovers a new strategy for suppressing viral counter-defense through protein-coding circular RNA in fruit flies.