Summary: Severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) leads to shutoff of protein synthesis, and nsp1, a central shutoff factor in coronaviruses, inhibits cellular mRNA translation. However, the diverse molecular mechanisms employed by nsp1 as well as its functional importance are unresolved. By overexpressing various nsp1 mutants and generating a SARS-CoV-2 mutant, we show that nsp1, through inhibition of translation and induction of mRNA degradation, targets translated cellular mRNA and is the main driver of host shutoff during infection. The propagation of nsp1 mutant virus is inhibited exclusively in cells with intact interferon (IFN) pathway as well as in vivo, in hamsters, and this attenuation is associated with stronger induction of type I IFN response. Therefore, although nsp1’s shutoff activity is broad, it plays an essential role, specifically in counteracting the IFN response. Overall, our results reveal the multifaceted approach nsp1 uses to shut off cellular protein synthesis and uncover nsp1’s explicit role in blocking the IFN response.