The measles virus P gene products V and C antagonize the host interferon (IFN) response, blocking both IFN signaling and production. Using Moraten vaccine strain-derived measles virus and isogenic mutants deficient for either V or C protein production (V(ko) and C(ko), respectively), we observed that the C(ko) virus was a potent inducer of IFN-beta, while induction by V(ko) virus was an order of magnitude lower than that by the C(ko) virus. The parental recombinant Moraten virus did not significantly induce IFN-beta. The enhanced IFN-inducing capacity of the C(ko) virus correlated with an enhanced activation of IFN regulatory factor 3 (IRF-3), NF-kappaB, and ATF-2 in C(ko)-infected compared to V(ko) or parental virus-infected cells. Furthermore, protein kinase PKR and mitochondrial adapter IPS-1 were required for maximal C(ko)-mediated IFN-beta induction, which correlated with the PKR-mediated enhancement of mitogen-activated protein kinase and NF-kappaB activation. Our results reveal multiple consequences of C protein expression and document an important function for PKR as an enhancer of IFN-beta induction during measles virus infection.