The nucleoprotein (N) of Borna disease virus (BDV) is the major target of the disease-inducing antiviral CD8 T-cell response in the central nervous system of mice. We established two transgenic mouse lines which express BDV-N in either neurons (Neuro-N) or astrocytes (Astro-N). Despite strong transgene expression, neurological disease or gross behavioral abnormalities were not observed in these animals. When Neuro-N mice were infected as adults, replication of BDV was severely impaired and was restricted to brain areas with a low density of transgene-expressing cells. Notably, the virus failed to replicate in the transgene-expressing granular and pyramidal neurons of the hippocampus (which are usually the preferred host cells of BDV). When Neuro-N mice were infected within the first 5 days of life, replication of BDV was not suppressed in most neurons, presumably because the onset of transgene expression in the brain occurred after these cells became infected with BDV. Astro-N mice remained susceptible to BDV infection, but they were resistant to BDV-induced neurological disorder. Unlike their nontransgenic littermates, Neuro-N mice with persistent BDV infection did not develop neurological disease after immunization with a vaccinia virus vector expressing BDV-N. In contrast to the situation in wild-type mice, this treatment also failed to induce N-specific CD8 T cells in the spleens of both transgenic mouse lines. Thus, while resistance to BDV infection in N-expressing neurons appeared to result from untimely expression of a viral nucleocapsid component, the resistance to BDV-induced neuropathology probably resulted from immunological tolerance.