Interferon-induced proteins (IFPs) exert multiple functions corresponding to diverse interferon signals. However, the intracellular functions of many IFPs are not fully characterized. Here, we report that IFP35, a member of the IFP family with a molecular mass of 35 kDa, can interact with the bovine Tas (BTas) regulatory protein of bovine foamy virus (BFV). The interaction involves NID2 (IFP35/Nmi homology domain) of IFP35 and the central domain of BTas. The overexpression of IFP35 disturbs the ability of BTas to activate viral-gene transcription and inhibits viral replication. The depletion of endogenous IFP35 by interfering RNA can promote the activation of BFV, suggesting an inhibitory function of IFP35 in viral-gene expression. In addition, IFP35 can interact with the homologous regulatory protein of prototype FV and arrest viral replication and repress viral transcription. Our study suggests that IFP35 may represent a novel pathway of interferon-mediated antiviral activity in host organisms that plays a role in the maintenance of FV latency.