Virus infection triggers innate responses to host cells including production of type I interferon (IFN). Since IFN production is also induced by treatment with poly(I:C), viral double-stranded (ds) RNA has been postulated to play a direct role in the process. In the present study, we investigated the effect of dsRNA binding proteins on virus-induced activation of the IFN-beta gene. We found that PACT, originally identified as protein activator for dsRNA-dependent protein kinase (PKR) and implicated in the regulation of translation, augmented IFN-beta gene activation induced by Newcastle disease virus. Concomitantly with the augmented activity of IFN-beta enhancer, increased activity of NF-kappaB and IRF-3 and IRF-7 was observed. For the observed effect, the dsRNA-binding activity of PACT was essential. We identified residues of PACT that interact with a presumptive target molecule to exert its function. Furthermore, PACT colocalized with viral replication complex in the infected cells. Thus the observed effect of PACT is novel and PACT is involved in the regulation of viral replication and results in a marked increase of cellular IFN-beta gene expression.