ABSTRACT The pathogenesis of human T cell leukemia virus type 1 (HTLV-1) is strongly linked to the viral regulatory proteins Tax1 and HBZ, whose opposing functions contribute to the clinical outcome of infection. Type I interferons alpha and beta (IFN-α and IFN-β) are key cytokines involved in innate immunity, and IFN-α, in combination with other antivirals, is extensively used in the treatment of HTLV-1 infection. The relationship between HTLV-1 and IFN signaling is unclear, and to date the effect of HBZ on this pathway has not been examined. Here we report that HBZ significantly enhances interferon regulatory factor 7 (IRF7)-induced IFN-α- and IFN-stimulated response element (ISRE) promoter activities and IFN-α production and can counteract the inhibitory effect of Tax1. In contrast to this, we show that HBZ and Tax1 cooperate to inhibit the induction of IFN-β and ISRE promoters by IRF3 and IFN-β production. In addition, we reveal that HBZ enhances ISRE activation by IFN-α. We further show that HBZ enhances IRF7 and suppresses IRF3 activation by TBK1 and IKKε. We demonstrate that HBZ has no effect on virus-induced nuclear accumulation of IRF3, suggesting that it may inhibit IRF3 activity at a transcriptional level. We show that HBZ physically interacts with IRF7 and IKKε but not with IRF3 or TBK1. Overall, our findings suggest that both HBZ and Tax1 are negative regulators of immediate early IFN-β innate immune responses, while HBZ but not Tax1 positively regulates the induction of IFN-α and downstream IFN-α signaling. IMPORTANCE Type I interferons are powerful antiviral cytokines and are used extensively in the treatment of HTLV-1-induced adult T cell leukemia (ATL). To date, the relationship between HTLV-1 and the IFN pathway is poorly understood, and studies so far have focused on Tax1. Our study is unique in that it examined the effect of HBZ, alone or in combination with Tax1, on type I IFN signaling. This is important because HBZ is frequently the only viral protein expressed in infected cells, particularly at later stages of infection. A better understanding of the how HBZ regulates IFN signaling may lead to the development of therapeutics that can modify such responses and improve the clinical outcome for infected individuals.