The influenza A virus non-structural protein 1 (NS1) is a multifunctional protein and an important virulence factor. It is composed of two well-characterized domains linked by a short, but not well crystallographically defined, region of unknown function. To study the possible function of this region, we introduced alanine substitutions to replace the two highly conserved leucine residues at amino acid positions 69 and 77. The mutant L69,77A NS1 protein retained wild-type (WT)-comparable binding capabilities to dsRNA, cleavage and polyadenylation specificity factor 30 and the p85β subunit of PI3K. A mutant influenza A virus expressing the L69,77A NS1 protein was generated using reverse genetics. L69,77A NS1 virus infection induced significantly higher levels of beta interferon (IFN-β) expression in Madin-Darby canine kidney (MDCK) cells compared with WT NS1 virus. In addition, the replication rate of the L69,77A NS1 virus was substantially lower in MDCK cells but not in Vero cells compared with the WT virus, suggesting that the L69,77A NS1 protein does not fully antagonize IFN during viral replication. L69,77A NS1 virus infection was not able to activate the PI3K/Akt anti-apoptotic pathway, suggesting that the mutant NS1 protein may not be localized such that it has access to p85β in vivo during infection, which was supported by the altered subcellular localization pattern of the mutant NS1 compared with WT NS1 after transfection or virus infection. Our data demonstrate that this linker region between the two domains is critical for the functions of the NS1 protein during influenza A virus infection, possibly by determining the protein's correct subcellular localization.