The 2009 pandemic H1N1 influenza virus encodes an NS1 protein with 11 amino acids (aa) truncation at the C-terminus. The C-terminal tail of influenza virus NS1 protein constitutes a nucleolar localization signal (NoLS) and is the binding domain of the cellular pre-mRNA processing protein, poly(A)-binding protein II (PABII). Here, our studies showed that the C-terminal-truncated NS1 of the 2009 pandemic virus was inefficient at blocking host gene expression, extension of the truncated NS1 to its full length increased the inhibition of host gene expression. Mechanistically, this increased inhibition of host gene expression by the full-length NS1 was not associated with nucleolar localization, but was due to the restoration of NS1's binding capacity to PABII. Furthermore, in vitro and in vivo characterization of two recombinant viruses encoding either the C-terminal 11-aa truncated or full-length NS1 of the 2009 pandemic virus showed that the C-terminal 11-aa truncation in NS1 did not significantly alter virus replication, but increased virus pathogenicity in mice.