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The vaccinia virus (VACV) strain Western Reserve C16 protein has been characterized and its effects on virus replication and virulence have been determined. TheC16Lgene is present in the inverted terminal repeat and so is one of the few VACV genes that are diploid. The C16 protein is highly conserved between different VACV strains, and also in the orthopoxviruses variola virus, ectromelia virus, horsepox virus and cowpox virus. C16 is a 37.5 kDa protein, which is expressed early during infection and localizes to the cell nucleus and cytoplasm of infected and transfected cells. The loss of theC16Lgene had no effect on virus growth kinetics but did reduce plaque size slightly. Furthermore, the virulence of a virus lackingC16L(vΔC16) was reduced in a murine intranasal model compared with control viruses and there were reduced virus titres from 4 days post-infection. In the absence of C16, the recruitment of inflammatory cells in the lung and bronchoalveolar lavage was increased early after infection (day 3) and more CD4+and CD8+T cells expressed the CD69 activation marker. Conversely, late after infection with vΔC16 (day 10) there were fewer T cells remaining, indicating more rapid clearance of infection. Collectively, these data indicate that C16 diminishes the immune response and is an intracellular immunomodulator.