The double-stranded RNA (dsRNA)-induced interferon response is a defense mechanism against viral infection. Upon interferon activation by dsRNA, 2',5'-oligoadenylate synthetase 1 (OAS1A) is induced; it binds dsRNA and converts ATP into 2',5'-linked oligomers of adenosine (called 2-5A), which activate RNase L that in turn degrades viral and cellular RNAs. In a screen to identify oocyte-specific genes, we identified a novel murine cDNA encoding an ovary-specific 2',5'-oligoadenylate synthetase-like protein, OAS1D, which displays 59% identity with OAS1A. OAS1D is predominantly cytoplasmic and is exclusively expressed in growing oocytes and early embryos. Like OAS1A, OAS1D binds the dsRNA mimetic poly(I-C), but unlike OAS1A, it lacks 2'-5' adenosine linking activity. OAS1D interacts with OAS1A and inhibits the enzymatic activity of OAS1A. Mutant mice lacking OAS1D (Oas1d(-/-)) display reduced fertility due to defects in ovarian follicle development, decreased efficiency of ovulation, and eggs that are fertilized arrest at the one-cell stage. These effects are exacerbated after activation of the interferon/OAS1A/RNase L pathway by poly(I-C). We propose that OAS1D suppresses the interferon/OAS/RNase L-mediated cellular destruction by interacting with OAS1A during oogenesis and early embryonic development.