The interferons (IFNs) are cytokines that play key roles in host defense against viral infections and immune surveillance against cancer. We report that BCR-ABL transformation of hematopoietic cells results in suppression of IFN-dependent responses, including transcription of IFN-inducible genes and generation of IFN-mediated antiviral effects. BCR-ABL trans-formation suppresses expression of several IFN-regulated genes containing ISRE or GAS elements in their promoters, including Isg15, Irf1, Irf9 and Ifit2. Suppressed suppression of trans-cription of ISRE-containing genes is also seen in cells expressing various BCR-ABL kinase domain mutants, including T315I, H396P, Y253F and E255K, but not kinase-defective BCR-ABL. Such effects are associated with impaired IFN-dependent phosphorylation of Stat1 on Tyr701 and Stat3 on Tyr705 and defective binding of Stat-complexes to ISRE or GAS elements. Beyond suppression of Stat-activities, BCR-ABL inhibits IFN-inducible phosphorylation/ activation of the p38 Map kinase, suggesting a dual mechanism by which this abnormal fusion protein blocks IFN-transcriptional responses. The inhibitory activities of BCR-ABL ultimately result in impaired IFN-mediated protection against encephalomyocarditis virus (EMCV) infection and reversal of IFN-dependent growth suppression. Altogether, our data provide evidence for a novel mechanism by which BCR-ABL impairs host-defenses and promotes malignant transformation, involving dual suppression of IFN-activated signaling pathways.