In bluetongue virus (BTV)-infected cells, large cytoplasmic aggregates are formed, termed viral inclusion bodies (VIBs), which are believed to be the sites of viral replication and morphogenesis. The BTV nonstructural protein NS2 is the major component of VIBs. NS2 undergoes intracellular phosphorylation and possesses a strong single-stranded RNA binding activity. By changing phosphorylated amino acids to alanines and aspartates, we have mapped the phosphorylated sites of NS2 to two serine residues at positions 249 and 259. Since both of these serines are within the context of protein kinase CK2 recognition signals, we have further examined if CK2 is involved in NS2 phosphorylation by both intracellular colocalization and an in vitro phosphorylation assay. In addition, we have utilized the NS2 mutants to determine the role of phosphorylation on NS2 activities. The data obtained demonstrate that NS2 phosphorylation is not necessary either for its RNA binding properties or for its ability to interact with the viral polymerase VP1. However, phosphorylated NS2 exhibited VIB formation while unmodified NS2 failed to assemble as VIBs although smaller oligomeric forms of NS2 were readily formed. Our data reveal that NS2 phosphorylation controls VIBs formation consistent with a model in which NS2 provides the matrix for viral assembly.