It is not known how influenza A viruses, important human pathogens, counter PKR activation, a crucial host antiviral response. Here we elucidate this mechanism. We show that the direct binding of PKR to the NS1 protein in vitro that results in inhibition of PKR activation requires the NS1 123-127 amino acid sequence. To establish whether such direct binding of PKR to the NS1 protein is responsible for inhibiting PKR activation in infected cells, we generated recombinant influenza A/Udorn/72 viruses expressing NS1 proteins in which amino acids 123/124 or 126/127 are changed to alanines. In cells infected with these mutant viruses, PKR is activated, eIF-2alpha is phosphorylated and viral protein synthesis is inhibited, indicating that direct binding of PKR to the 123-127 sequence of the NS1 protein is necessary and sufficient to block PKR activation in influenza A virus-infected cells. Unexpectedly, the 123/124 mutant virus is not attenuated because reduced viral protein synthesis is offset by enhanced viral RNA synthesis at very early times of infection. These early viral RNAs include those synthesized predominantly at later times during wild-type virus infection, demonstrating that wild-type temporal regulation of viral RNA synthesis is absent in 123/124 virus-infected cells. Enhanced early viral RNA synthesis after 123/124 virus infection also occurs in mouse PKR-/- cells, demonstrating that PKR activation and deregulation of the time course of viral RNA synthesis are not coupled. These results indicate that the 123/124 site of the NS1A protein most likely functionally interacts with the viral polymerase to mediate temporal regulation of viral RNA synthesis. This interaction would occur in the nucleus, whereas PKR would bind to NS1A proteins in the cytoplasm prior to their import into the nucleus.