The antiviral activity of interferon was found to be related to the amount of interferon that became cell-associated. Reduction in the amount of interferon uptake by cells by sulfhydryl-binding compounds (p-chloromercuribenzoate and N-ethylmaleimide) reduced the level of antiviral activity of the cells. Interferon, inactivated by heat or trypsin did not affect the ability of active interferon to induce an interferon uptake system. Trypsin-inactivated interferon was, however, shown to compete with active interferon for the interferon uptake system while heat-inactivated interferon was without effect.