The type I IFNs exert a range of activities that include antiviral, antiproliferative, and immunomodulatory effects. To study this further, we have constructed recombinant vaccinia viruses expressing HIV or hemagglutinin (HA) Ags along with murine type I IFNs, IFN-α 4 (HA-VV-IFN-α 4), IFN-β (HA-VV-IFN-β), or IFN-ε (HIV-VV-IFN-ε), a recently discovered member of this family. Our aims were to characterize IFN-ε functionality as a type I IFN and also to study the biological properties of these factors toward the development of safer and more effective vector-based vaccines. HIV-VV-IFN-ε and HA-VV-IFN-β grew to lower titers than did their parental controls in murine cell lines. In vivo, however, HIV-VV-IFN-ε growth was not attenuated, while IFN-β demonstrated potent local antiviral activity with no replication of HA-VV-IFN-β detected. Flow cytofluorometric analysis of B lymphocytes incubated with virally encoded IFN-ε showed up-regulation of activation markers CD69 and CD86, while RT-PCR of IFN-ε-treated cells revealed that gene expression levels of antiviral proteins were elevated, indicating the induction of an antiviral state. The use of these constructs in a poxvirus prime-boost immunization regime led to robust humoral and cellular immune responses against the encoded Ags, despite the lack of replication in the case of HA-VV-IFN-β. Thus, coexpression of these factors may be beneficial in the design of safer vector-based vaccines. Our data also indicate that while IFN-ε exhibits certain biological traits similar to other type I IFNs, it may also have a specific role in mucosal immune regulation that is quite distinct.