Interferons (IFNs) encode a family of secreted proteins that provide the front-line defense against viral infections. Their diverse biological actions are thought to be mediated by the products of specific but usually overlapping sets of cellular genes induced in the target cells. We have recently isolated a new human IFN-induced gene that we have termed ISG20, which codes for a 3' to 5' exonuclease with specificity for single-stranded RNA and, to a lesser extent, for DNA. In this report, we demonstrate that ISG20 is involved in the antiviral functions of IFN. In the absence of IFN treatment, ISG20-overexpressing HeLa cells showed resistance to infections by vesicular stomatitis virus (VSV), influenza virus, and encephalomyocarditis virus (three RNA genomic viruses) but not to the DNA genomic adenovirus. ISG20 specifically interfered with VSV mRNA synthesis and protein production while leaving the expression of cellular control genes unaffected. No antiviral effect was observed in cells overexpressing a mutated ISG20 protein defective in exonuclease activity, demonstrating that the antiviral effects were due to the exonuclease activity of ISG20. In addition, the inactive mutant ISG20 protein, which is able to inhibit ISG20 exonuclease activity in vitro, significantly reduced the ability of IFN to block VSV development. Taken together, these data suggested that the antiviral activity of IFN against VSV is partly mediated by ISG20. We thus show that, besides RNase L, ISG20 has an antiviral activity, supporting the idea that it might represent a novel antiviral pathway in the mechanism of IFN action.