Different genetically engineered mutants of bovine viral diarrhea virus (BVDV) were analyzed for the ability to establish infection in the fetuses of pregnant heifers. The virus mutants exhibited either a deletion of the overwhelming part of the genomic region coding for the N-terminal protease N(pro), a deletion of codon 349, which abrogates the RNase activity of the structural glycoprotein E(rns), or a combination of both mutations. Two months after infection of pregnant cattle with wild-type virus or either of the single mutants, the majority of the fetuses contained virus or were aborted or found dead in the uterus. In contrast, the double mutant was not recovered from fetal tissues after a similar challenge, and no dead fetuses were found. This result was verified with a nonrelated BVDV containing similar mutations. After intrauterine challenge with wild-type virus, mutated viruses, and cytopathogenic BVDV, all viruses could be detected in fetal tissue after 5, 7, and 14 days. Type 1 interferon (IFN) could be detected in fetal serum after challenge, except with wild-type noncytopathogenic BVDV. On days 7 and 14 after challenge, the largest quantities of IFN in fetal serum were induced by the N(pro) and RNase-negative double mutant virus. The longer duration of fetal infection with the double mutant resulted in abortion. Therefore, for the first time, we have demonstrated the essential role of both N(pro) and E(rns) RNase in blocking interferon induction and establishing persistent infection by a pestivirus in the natural host.