When mouse L cells are infected by vaccinia virus, a specific kinase inhibitory factor is produced which inhibits the interferon-induced, double-stranded RNA-dependent protein kinase (P. Whitaker-Dowling and J. S. Youngner (1983) Virology 131, 128-136). This inhibitory factor appears early in vaccinia infection (90 min) and its production requires protein synthesis. It inhibits the phosphorylation of the alpha subunit of protein synthesis initiation factor eIF-2 and it is active in mixed extracts of IFN-treated cells and vaccinia-infected cells. The vaccinia-mediated inhibition of the IFN-induced protein kinase is not due to a specific phosphatase or a specific protease and can be reversed by the addition of excess double-stranded RNA. Evidence is presented which suggests that the specific kinase inhibitory factor interacts in a stoichiometric manner with the double-stranded RNA which is required for the activation of the interferon-induced protein kinase.