Influenza virus infections lead to a burst of type I interferon (IFN) in the human respiratory tract, which most probably accounts for a rapid control of the virus. Although in mice, IFN-induced Mx1 factor mediates a major part of this response, the situation is less clear in humans. Interestingly, a recently identified IFN-induced cellular protein, tetherin (also known as CD317, BST-2, or HM1.24), exerts potent antiviral activity against a broad range of retroviruses, as well as several other enveloped viruses, by impeding the release of newly generated viral particles from the cell surface. Here we show that influenza virus belongs to the targets of this potent antiviral factor. Ectopic expression of tetherin strongly inhibited fully replicative influenza virus. In addition, depleting endogenous tetherin increased viral production of influenza virions, both in cells constitutively expressing tetherin and upon its induction by IFN. We further demonstrate, by biochemical and morphological means, that tetherin exerts its antiviral action by tethering newly budded viral particles, a mechanism similar to the one that operates against HIV-1. In addition, we determined that the magnitude of tetherin antiviral activity is comparable with or higher than the one of several previously identified anti-influenza cellular factors, such as MxA, ADAR1, ISG15, and viperin. Finally, we demonstrate that influenza virus reduces the impact of tetherin-mediated restriction on its replication by several mechanisms. First, the influenza virus NS1 protein impedes IFN-mediated tetherin induction. Second, influenza infection leads to a decrease of tetherin steady state levels, and the neuraminidase surface protein partly counteracts its activity. Overall, our study helps to delineate the intricate molecular battle taking place between influenza virus and its host cells.