The ribonuclease activity of the soluble glycoprotein E(rns) of pestiviruses represents a unique mechanism to circumvent the host's innate immune system by blocking interferon type-I synthesis in response to extracellularly added single- (ss) and double-stranded (ds) RNA. However, the reason why pestiviruses encode a ribonuclease in addition to the abundant serum RNases remained elusive. Here, we show that the 5' UTR and NS5B regions of various strains of the RNA genome of the pestivirus bovine viral diarrhea virus (BVDV) are resistant to serum RNases and are potent TLR-3 agonists. Inhibitory activity of E(rns) was restricted to cleavable RNA products, and did not extend to the synthetic TLR-7/8 agonist R-848. RNA complexed with the antimicrobial peptide LL37 was protected from degradation by E(rns)in vitro but was fully inhibited by E(rns) in its ability to induce IFN in cell cultures, suggesting that the viral protein is mainly active in cleaving RNA in an intracellular compartment. We propose that secreted E(rns) represents a potent IFN antagonist, which degrades viral RNA that is resistant to the ubiquitous host RNases in the extracellular space. Thus, the viral RNase prevents its own pathogen-associated molecular pattern (PAMP) to inadvertently activate the IFN response that might break innate immunotolerance required for persistent pestivirus infections.