In cells infected by wild-type (wt) vesicular stomatitis virus (VSV) Indiana, host transcription is severely inhibited. DNA cotransfection studies have implicated the VSV matrix (M) protein in this process (B. L. Black and D. S. Lyles, J. Virol. 66:4058-4064, 1992). The M protein inhibited transcription not only from viral promoters in plasmids but also from the chromosomally integrated human immunodeficiency virus type 1 (HIV-1) provirus promoter (S.-Y. Paik, A. C. Banerjea, G. G. Harmison, C.-J. Chen, and M. Schubert, J. Virol. 69:3529-3537, 1995). In this study, we investigated the effect of wt VSV M protein on expression of a reporter gene under control of a cellular promoter (beta-interferon [IFN-beta] promoter), using double transient transfections in BHK and COS-1 cells. The cellular IFN-beta promoter was as susceptible to the inhibitory effect of the M protein as the viral promoters used previously. Viral proteins N, P, and G had no significant effect on reporter gene expression. The M protein gene from VSV mutant T1026R1, which is defective in host transcription inhibition, was cloned and sequenced, and its effect on reporter gene expression was tested. The mutant M protein had a methionine-to-arginine change at position 51 in the protein sequence and did not inhibit transcription from either the IFN-beta promoter or viral promoters. This VSV mutant is a good inducer of IFN, as opposed to the wt virus, which suppresses IFN induction. These results show that the M protein inhibits transcription from cellular as well as viral promoters and that the M protein does not regulate the IFN promoter any differently from viral promoters. While the M protein may play a role in IFN gene regulation, other viral or cellular factors that provide specificity to the induction process must also be involved.