Influenza viruses cause a highly contagious respiratory disease in humans. The NS1 proteins of influenza A and B viruses (NS1A and NS1B proteins, respectively) are composed of two domains, a dimeric N-terminal domain and a C-terminal domain, connected by a flexible polypeptide linker. Here we report the 2.0-A X-ray crystal structure and nuclear magnetic resonance studies of the NS1B C-terminal domain, which reveal a novel and unexpected basic RNA-binding site that is not present in the NS1A protein. We demonstrate that single-site alanine replacements of basic residues in this site lead to reduced RNA-binding activity, and that recombinant influenza B viruses expressing these mutant NS1B proteins are severely attenuated in replication. This novel RNA-binding site of NS1B is required for optimal influenza B virus replication. Most importantly, this study reveals an unexpected RNA-binding function in the C-terminal domain of NS1B, a novel function that distinguishes influenza B viruses from influenza A viruses.