Cytoplasmic inclusion bodies (IBs) are a common feature of single-stranded, non-segmented, negative-strand RNA virus (Mononegavirales) infections and are thought to be regions of active virus transcription and replication. Here we followed the dynamics of IB formation and maintenance in cells infected with persistent and lytic/acute variants of the paramyxovirus, parainfluenza virus type 5 (PIV5). We show that there is a rapid increase in the number of small inclusions bodies up until approximately 12 h post-infection. Thereafter the number of inclusion bodies decreases but they increase in size, presumably due to the fusion of these liquid organelles that can be disrupted by osmotically shocking cells. No obvious differences were observed at these times between inclusion body formation in cells infected with lytic/acute and persistent viruses. IBs are also readily detected in cells persistently infected with PIV5, including in cells in which there is little or no ongoing virus transcription or replication. In situ hybridization shows that genomic RNA is primarily located in IBs, whilst viral mRNA is more diffusely distributed throughout the cytoplasm. Some, but not all, IBs show incorporation of 5-ethynyl-uridine (5EU), which is integrated into newly synthesized RNA, at early times post-infection. These results strongly suggest that, although genomic RNA is present in all IBs, IBs are not continuously active sites of virus transcription and replication. Disruption of IBs by osmotically shocking persistently infected cells does not increase virus protein synthesis, suggesting that in persistently infected cells most of the virus genomes are in a repressed state. The role of IBs in PIV5 replication and the establishment and maintenance of persistence is discussed.