Highly pathogenic avian influenza viruses H5N8 clade 2.3.4.4 caused outbreaks in poultry at an unprecedented global scale. The virus was spread by wild birds in Asia in two waves: clade-2.3.4.4A in 2014/2015 and clade-2.3.4.4B since 2016 up to today. Both clades were highly virulent in chickens, but only clade-B viruses exhibited high virulence in ducks. Viral factors which contribute to virulence and transmission of these panzootic H5N8 2.3.4.4 viruses are largely unknown. The NS1 protein, typically composed of 230 amino acids (aa), is a multifunctional protein which is also a pathogenicity factor. Here, we studied the evolutionary trajectory of H5N8 NS1 proteins from 2013 to 2019 and their role in the fitness of H5N8 viruses in chickens and ducks. Sequence analysis and in-vitro experiments indicated that clade-2.3.4.4A and clade-2.3.4.4B viruses have a preference for NS1 of 237-aa and 217-aa, respectively over NS1 of 230-aa. NS217 was exclusively seen in domestic and wild birds in Europe. The extension of the NS1 C-terminus of clade-B virus reduced virus transmission and replication in chickens and ducks and partially impaired the systemic tropism to the endothelium in ducks. Conversely, lower impact on fitness of clade-A virus was observed. Remarkably, the NS1 of clade-A and clade-B, regardless of length, was efficient to block interferon induction in infected chickens and changes in the NS1 C-terminus reduced the efficiency for interferon antagonism. Together, the NS1 C-terminus contributes to the efficient transmission and high fitness of H5N8 viruses in chickens and ducks. Importance The panzootic H5N8 highly pathogenic avian influenza viruses of clade 2.3.4.4A and 2.3.4.4B devastated poultry industry globally. Clade 2.3.4.4A was predominant in 2014/2015 while clade 2.3.4.4B was widely spread in 2016/2017. Both clades exhibited different pathotypes in ducks. Virus factors contributing to virulence and transmission are largely unknown. The NS1 protein is typically composed of 230 amino-acids (aa) and is an essential interferon (IFN) antagonist. Here, we found that the NS1 protein of clade 2.3.4.4A preferentially evolved toward long NS1 with 237-aa, while clade 2.3.4.4B evolved toward shorter NS1 with 217-aa (exclusively found in Europe) due stop-codons in the C-terminus (CTE). We showed that the NS1 CTE of H5N8 is required for efficient virus replication, transmission and endotheliotropism in ducks. In chickens, H5N8 NS1 evolved toward higher efficiency to block IFN-response. These findings may explain the preferential pattern for short NS1 and high fitness of the panzootic H5N8 in birds.