The induction of interferon-stimulated genes by signal transducer and activator of transcription (STAT) proteins, is a critical host defence to fight virus infections. Here, a highly expressed poxvirus protein 018 is shown to inhibit IFN-induced signalling by binding the SH2 domain of STAT1 to prevent STAT1 association with an activated IFN receptor. Despite the presence of additional inhibitors of IFN-induced signalling, a poxvirus lacking 018 was attenuated in mice. The 2.0-angstrom crystal structure of the 018:STAT1 complex reveals a mechanism for a high-affinity, pTyr-independent mode of binding to an SH2 domain. Furthermore, the STAT1 binding motif of 018 shows sequence similarity to the STAT1-binding proteins from Nipah virus, which like 018, block the association of STAT1 with an IFN receptor. Taken together, these results provide detailed mechanistic insight into a potent mode of STAT1 antagonism, found to exist in genetically diverse virus families.