The induction of thymidine kinase (TK) and DNA polymerase was inhibited by interferon (IFN) in mouse L-cells infected with herpes simplex virus type 1 (HSV-1). The inhibitory activity of IFN at this early stage of HSV-1 replication was followed by a reduced virus yield and was dependent on the multiplicity of infection. The expression of a cloned thymidine kinase (tk) gene of HSV-1, in biochemically transformed L-cells (LTK+), was not affected by IFN. These same LTK+ cells, however, developed an antiviral state since, upon HSV-1 infection, the induction of TK and DNA polymerase of the replicating virus was inhibited by IFN. Furthermore, IFN inhibited the transactivation of the HSV-1 tk gene in the biochemically transformed LTK+ cells, which followed infection by a virus mutant defective in the tk gene (HSV-1 TK-). This transactivation is dependent on expression of immediate-early HSV-1 alpha-genes. These results indicate that IFN inhibits HSV-1 replication at an early step prior to DNA synthesis. In addition, IFN displays a differential effect on the HSV-1 thymidine kinase gene, either when part of the replicating virus or when expressed as a cellular gene in biochemically transformed cells.