The flavivirus genus includes viruses with a remarkable ability to produce disease on a large scale. The expansion and increased endemicity of dengue and West Nile viruses in the Americas exemplifies their medical and epidemiological importance. The rapid detection of virus infection and induction of the innate antiviral response are crucial to determining the outcome of infection. The intracellular pathogen receptors RIG-I and MDA5 play a central role in detecting flavivirus infections and initiating a robust antiviral response. Yet, these viruses are still capable of producing acute illness in humans. It is now clear that flaviviruses utilize a variety of mechanisms to modulate the interferon response. The non-structural proteins of the various flaviviruses reduce expression of interferon dependent genes by blocking phosphorylation, enhancing degradation or down-regulating expression of major components of the JAK/STAT pathway. Recent studies indicate that interferon modulation is an important factor in the development of severe flaviviral illness. This suggests that an increased understanding of viral-host interactions will facilitate the development of novel therapeutics to treat these viral infections and improved biological models to study flavivirus pathogenesis.