Infection of pregnant cows with noncytopathic (ncp) bovine viral diarrhea virus (BVDV) induces rapid innate and adaptive immune responses, resulting in clearance of the virus in less than 3 weeks. Seven to 14 days after inoculation of the cow, ncpBVDV crosses the placenta and induces a fetal viremia. Establishment of persistent infection with ncpBVDV in the fetus has been attributed to the inability to mount an immune response before 90-150 days of gestational age. The result is 'immune tolerance', persistent viral replication and shedding of ncpBVDV. In contrast, we describe the chronic upregulation of fetal Type I interferon (IFN) pathway genes and the induction of IFN-γ pathways in fetuses of cows infected on day 75 of gestation. Persistently infected (PI) fetal IFN-γ concentrations also increased at day 97 at the peak of fetal viremia and IFN-γ mRNA was significantly elevated in fetal thymus, liver and spleen 14-22 days post maternal inoculation. PI fetuses respond to ncpBVDV infection through induction of Type I IFN and IFN-γ activated genes leading to a reduction in ncpBVDV titer. We hypothesize that fetal infection with BVDV persists because of impaired induction of IFN-γ in the face of activated Type I IFN responses. Clarification of the mechanisms involved in the IFN-associated pathways during BVDV fetal infection may lead to better detection methods, antiviral compounds and selection of genetically resistant breeding animals.