IFN-τ is a new class of type I IFN that is secreted by the trophoblast and is the signal for maternal recognition of pregnancy in sheep. IFN-τ has potent immunosuppressive and antiviral activities similar to other type I IFN but is less cytotoxic than IFN-α/β. The current investigation concerns the effect of recombinant ovine IFN-tau (rOvIFN-τ) on the modulation of MHC class I and II expression on cloned mouse cerebrovascular endothelial (CVE) cells. IFN-tau induced tyrosine phosphorylation of Stat1 and up regulated the expression of MHC class I on CVE. One proposed action by which type I IFN reduce the relapse rate in MS is via interference with IFN-γ-induced MHC class II expression. IFN-τ was shown to down regulate IFN-γ-induced MHC class II expression on CVE and, hence, may be of potential therapeutic value in down regulating inflammation in the central nervous system (CNS). IFN-τ did not upregulate the expression of MHC class II on CVE. IFN-τ also inhibited the replication of Theiler’s virus in CVE.