Upon viral infection, infected cells mount an antiviral response that culminates with the production of type I IFN (IFN-alpha/beta) and other proinflammatory cytokines that control the infection. Production of type I IFN occurs both in vivo and in vitro in response to Bluetongue virus (BTV), an arthropod-borne virus, but the underlying mechanisms responsible for this event remained unknown until recently. This review describes the recent advances in the identification of cellular sensors and signalling pathways involved in this process. In non-hematopoietic cells, expression of IFN-beta in response to BTV infection depends on the activation of the RNA helicases retinoic acid-inducible gene-I (RIG-I) and melanoma differentiation-associated gene 5 (MDA5). In contrast, induction of IFN-alpha/beta synthesis in sheep primary plasmacytoid dendritic cells (pDCs) required the MyD88 adaptor independently of the Toll-like receptor 7 (TLR7), as well as the kinases dsRNA-activated protein kinase (PKR) and stress-activated protein kinase (SAPK)/Jun N-terminal protein kinase (JNK). In order to counteract this antiviral response, most of viruses have elaborated mechanisms to hinder its action. This review also describes the ability of BTV to interfere with the IFN pathway and the recent findings describing the non-structural viral protein NS3 as a powerful antagonist of the host cellular response.