Myxoma virus (MYXV) is Leporipoxvirus that possesses a specific rabbit‐restricted host tropism but exhibits a much broader cellular host range in cultured cells. MYXV is able to efficiently block all aspects of the type I interferon (IFN)‐induced antiviral state in rabbit cells, partially in human cells and very poorly in mouse cells. The mechanism(s) of this species‐specific inhibition of type I IFN‐induced antiviral state is not well understood. Here we demonstrate that MYXV encoded protein M029, a truncated relative of the vaccinia virus (VACV) E3 double‐stranded RNA (dsRNA) binding protein that inhibits protein kinase R (PKR), can also antagonize the type I IFN‐induced antiviral state in a highly species‐specific manner. In cells pre‐treated with type I IFN prior to infection, MYXV exploits M029 to overcome the induced antiviral state completely in rabbit cells, partially in human cells, but not at all in mouse cells. However, in cells pre‐infected with MYXV, IFN‐induced signaling is fully inhibited even in the absence of M029 in cells from all three species, suggesting that other MYXV protein(s) apart from M029 block IFN signaling in a speciesindependent manner. We also show that the antiviral state induced in rabbit, human or mouse cells by type I IFN can inhibit M029‐knockout MYXV even when PKR is genetically knocked‐out, suggesting that M029 targets other host proteins for this antiviral state inhibition. Thus, the MYXV dsRNA binding protein M029 not only antagonizes PKR from multiple species but also blocks the type I IFN antiviral state independently of PKR in a highly species‐specific fashion.