ABSTRACT: The 5' cap methylation of viral RNA plays important roles in RNA stability, efficient translation, and immune evasion. Thus, RNA cap methylation is an attractive target for antiviral discovery and development of new live attenuated vaccines. For coronaviruses, RNA cap structure is first methylated at the guanine-N-7 (G-N-7) position by nonstructural protein 14 (nsp14), which facilitates and precedes the subsequent ribose 2'-O methylation by the nsp16-nsp10 complex. Using porcine epidemic diarrhea virus (PEDV), an Alphacoronavirus, as a model, we showed that G-N-7 methyltransferase (G-N-7 MTase) of PEDV nsp14 methylated RNA substrates in a sequence-unspecific manner. PEDV nsp14 can efficiently methylate RNA substrates with various lengths in both neutral and alkaline pH environments and can methylate cap analogs (GpppA and GpppG) and single-nucleotide GTP but not ATP, CTP, or UTP. Mutations to the S-adenosyl-l-methionine (SAM) binding motif in the nsp14 abolished the G-N-7 MTase activity and were lethal to PEDV. However, recombinant rPEDV-D350A with a single mutation (D350A) in nsp14, which retained 29.0% of G-N-7 MTase activity, was viable. Recombinant rPEDV-D350A formed a significantly smaller plaque and had significant defects in viral protein synthesis and viral replication in Vero CCL-81 cells and intestinal porcine epithelial cells (IPEC-DQ). Notably, rPEDV-D350A induced significantly higher expression of both type I and III interferons in IPEC-DQ cells than the parental rPEDV. Collectively, our results demonstrate that G-N-7 MTase activity of PEDV modulates viral replication, gene expression, and innate immune responses.IMPORTANCE Coronaviruses (CoVs) include a wide range of important human and animal pathogens. Examples of human CoVs include severe acute respiratory syndrome coronavirus (SARS-CoV-1), Middle East respiratory syndrome coronavirus (MERS-CoV), and the most recently emerged SARS-CoV-2. Examples of pig CoVs include porcine epidemic diarrhea virus (PEDV), porcine deltacoronavirus (PDCoV), and swine enteric alphacoronavirus (SeACoV). There are no vaccines or antiviral drugs for most of these viruses. All known CoVs encode a bifunctional nsp14 protein which possesses ExoN and guanine-N-7 methyltransferase (G-N-7 MTase) activities, responsible for replication fidelity and RNA cap G-N-7 methylation, respectively. Here, we biochemically characterized G-N-7 MTase of PEDV nsp14 and found that G-N-7 MTase-deficient PEDV was defective in replication and induced greater responses of type I and III interferons. These findings highlight that CoV G-N-7 MTase may be a novel target for rational design of live attenuated vaccines and antiviral drugs.