Host cells respond to viral infection by the production of type I interferons (IFNs), which induce the expression of antiviral genes. Herpes simplex virus I (HSV-1) encodes many mechanisms that inhibit the type I IFN response, including the ICP27-dependent inhibition of type I IFN signaling. Here we show inhibition of Stat-1 nuclear accumulation in cells that express ICP27. ICP27 expression also induces the secretion of a small, heat-stable type I IFN antagonizing protein that inhibits Stat-1 nuclear accumulation. We show that the inhibition of IFN-induced Stat-1 phosphorylation occurs at or upstream of Jak-1 phosphorylation. Finally, we show that ISG15 expression is induced after IFN alpha treatment in mock-infected cells, but not cells infected with WT HSV-1 or ICP27(-) HSV-1. These data suggest that HSV-1 has evolved multiple mechanisms to inhibit IFN signaling not only in infected cells, but also in neighboring cells, thereby allowing for increased viral replication and spread. (C) 2009 Elsevier Inc. All rights reserved.