Type I IFNs are critical players in host innate and adaptive immunity. IFN signaling is tightly controlled to ensure appropriate immune responses as imbalance could result in uncontrolled inflammation or inadequate responses to infection. It is therefore important to understand how type I IFN signaling is regulated. Here we have investigated the mechanism by which suppressor of cytokine signaling 1 (SOCS1) inhibits type I IFN signaling. We have found that SOCS1 inhibits type I IFN signaling not via a direct interaction with the IFN α receptor 1 (IFNAR1) receptor component but through an interaction with the IFNAR1-associated kinase Tyk2. We have characterized the residues/regions involved in the interaction between SOCS1 and Tyk2 and found that SOCS1 associates via its SH2 domain with conserved phosphotyrosines 1054 and 1055 of Tyk2. The kinase inhibitory region of SOCS1 is also essential for its interaction with Tyk2 and inhibition of IFN signaling. We also found that Tyk2 is preferentially Lys-63 polyubiquitinated and that this activation reaction is inhibited by SOCS1. The consequent effect of SOCS1 inhibition of Tyk2 not only results in a reduced IFN response because of inhibition of Tyk2 kinase-mediated STAT signaling but also negatively impacts IFNAR1 surface expression, which is stabilized by Tyk2.