Severe complications of Zika virus (ZIKV) infection might be caused by inflammation, but how ZIKV induces proinflammatory cytokines is not understood. In this study, we show opposite regulatory effects of the ZIKV NS5 protein on interferon (IFN) signaling. Whereas ZIKV and its NS5 protein were potent suppressors of type I and type III IFN signaling, they were found to activate type II IFN signaling. Inversely, IFN-γ augmented ZIKV replication. NS5 interacted with STAT2 and targeted it for ubiquitination and degradation, but it had no influence on STAT1 stability or nuclear translocation. The recruitment of STAT1-STAT2-IRF9 to IFN-β-stimulated genes was compromised when NS5 was expressed. Concurrently, the formation of STAT1-STAT1 homodimers and their recruitment to IFN-γ-stimulated genes, such as the gene encoding the proinflammatory cytokine CXCL10, were augmented. Silencing the expression of an IFN-γ receptor subunit or treatment of ZIKV-infected cells with a JAK2 inhibitor suppressed viral replication and viral induction of IFN-γ-stimulated genes. Taken together, our findings provide a new mechanism by which the ZIKV NS5 protein differentially regulates IFN signaling to facilitate viral replication and cause diseases. This activity might be shared by a group of viral IFN modulators.IMPORTANCE Mammalian cells produce three types of interferons to combat viral infection and to control host immune responses. To replicate and cause diseases, pathogenic viruses have developed different strategies to defeat the action of host interferons. Many viral proteins, including the Zika virus (ZIKV) NS5 protein, are known to be able to suppress the antiviral property of type I and type III interferons. Here we further show that the ZIKV NS5 protein can also boost the activity of type II interferon to induce cellular proteins that promote inflammation. This is mediated by the differential effect of the ZIKV NS5 protein on a pair of cellular transcription factors, STAT1 and STAT2. NS5 induces the degradation of STAT2 but promotes the formation of STAT1-STAT1 protein complexes, which activate genes controlled by type II interferon. A drug that specifically inhibits the IFN-γ receptor or STAT1 shows an anti-ZIKV effect and might also have anti-inflammatory activity.