IKKϵ is an IKK (inhibitor of nuclear factor κBkinase)–related kinase implicated in virus induction of interferon-β (IFNβ). We report that, although mice lacking IKKϵ produce normal amounts of IFNβ, they are hypersusceptible to viral infection because of a defect in the IFN signaling pathway. Specifically, a subset of type I IFN-stimulated genes are not activated in the absence of IKKϵ because the interferon-stimulated gene factor 3 complex (ISGF3) does not bind to promoter elements of the affected genes. We demonstrate that IKKϵ is activated by IFNβ and that IKKϵ directly phosphorylates signal transducer and activator of transcription 1 (STAT1), a component of ISGF3. We conclude that IKKϵ plays a critical role in the IFN-inducible antiviral transcriptional response.