Human parainfluenza virus type 1 (HPIV1) is an important respiratory pathogen in young children, the immunocompromised, and the elderly. We found that infection with wild-type (WT) HPIV1 suppressed the innate immune response in human airway epithelial cells by preventing not only phosphorylation of interferon regulatory factor 3 (IRF3) but also degradation of IκBβ, thereby inhibiting IRF3 and NF-κB activation, respectively. Both of these effects were ablated by a F170S substitution in the HPIV1 C proteins (F170S) or by silencing the C open reading frame [P(C-)], resulting in a potent beta interferon (IFN-β) response. Using murine knockout cells, we found that IFN-β induction following infection with either mutant relied mainly on melanoma-associated differentiation gene 5 (MDA5) rather than retinoic acid-inducible gene I (RIG-I). Infection with either mutant, but not WT HPIV1, induced a significant accumulation of intracellular double-stranded RNA (dsRNA). These mutant viruses directed a marked increase in the accumulation of viral genome, antigenome, and mRNA that was coincident with the accumulation of dsRNA. In addition, the amount of viral proteins was reduced compared to that of WT HPIV1. Thus, the accumulation of dsRNA might be a result of an imbalance in the N protein/genomic RNA ratio leading to incomplete encapsidation. Protein kinase R (PKR) activation and IFN-β induction followed the kinetics of dsRNA accumulation. Interestingly, the C proteins did not appear to directly inhibit intracellular signaling involved in IFN-β induction; instead, their role in preventing IFN-β induction appeared to be in suppressing the formation of dsRNA. PKR activation contributed to IFN-β induction and also was associated with the reduction in the amount of viral proteins. Thus, the HPIV1 C proteins normally limit the accumulation of dsRNA and thereby limit activation of IRF3, NF-κB, and PKR. If C protein function is compromised, as in the case of F170S HPIV1, the resulting PKR activation and reduction in viral protein levels enable the host to further reduce C protein levels and to mount a potent antiviral type I IFN response.