Some lytic proteins encoded by Epstein-Barr virus (EBV) suppress host interferon (IFN) signaling to facilitate viral replication. In this study, we sought to identify and characterize EBV proteins antagonizing IFN signaling. The induction of IFN-stimulated genes (ISGs) by IFN-ß was effectively suppressed by EBV. A functional screen was therefore performed to identify IFN-antagonizing proteins encoded by EBV. EBV tegument protein BGLF2 was identified as a potent suppressor of JAK-STAT signaling. This activity was found to be independent of its stimulatory effect on p38 and JNK pathways. Association of BGLF2 with STAT2 resulted in more pronounced K48-linked polyubiquitination and proteasomal degradation of the latter. Mechanistically, BGLF2 promoted the recruitment of SHP1 phosphatase to STAT1 to inhibit its tyrosine phosphorylation. In addition, BGLF2 associated with cullin 1 E3 ubiquitin ligase to facilitate its recruitment to STAT2. Consequently, BGLF2 suppressed ISG induction by IFN-ß. Furthermore, BGLF2 also suppressed type II and type III IFN signaling, although the suppressive effect on type II IFN response was milder. When pretreated with IFN-ß, host cells became less susceptible to primary infection of EBV. This phenotype was reversed when expression of BGLF2 was enforced. Finally, genetic disruption of BGLF2 in EBV led to more pronounced induction of ISGs. Our study unveils the roles of BGLF2 not only in the subversion of innate IFN response but also in lytic infection and reactivation of EBV. IMPORTANCE Epstein-Barr virus (EBV) is an oncogenic virus associated with the development of lymphoid and epithelial malignancies. EBV has to subvert interferon-mediated host antiviral response to replicate and cause diseases. It is therefore of great interest to identify and characterize interferon-antagonizing proteins produced by EBV. In this study, we perform a screen to search for EBV proteins that suppress the action of interferons. We further show that BGLF2 protein of EBV is particularly strong in this suppression. This is achieved by inhibiting two key proteins STAT1 and STAT2 that mediate the antiviral activity of interferons. BGLF2 recruits a host enzyme to remove the phosphate group from STAT1 thereby inactivating its activity. BGLF2 also redirects STAT2 for degradation. A recombinant virus in which BGLF2 gene has been disrupted can activate host interferon response more robustly. Our findings reveal a novel mechanism by which EBV BGLF2 protein suppresses interferon signaling.