Apoptosis plays an important role in the pathogenesis of reovirus encephalitis. Reovirus outer-capsid protein mu1, which functions to penetrate host cell membranes during viral entry, is the primary regulator of apoptosis following reovirus infection. Ectopic expression of full-length and truncated forms of mu1 indicates that the mu1 phi domain is sufficient to elicit a cell death response. To evaluate the contribution of the mu1 phi domain to the induction of apoptosis following reovirus infection, phi mutant viruses were generated by reverse genetics and analyzed for the capacity to penetrate cell membranes and elicit apoptosis. We found that mutations in phi diminish reovirus membrane penetration efficiency by preventing conformational changes that lead to generation of key reovirus entry intermediates. Independent of effects on membrane penetration, amino acid substitutions in phi affect the apoptotic potential of reovirus, suggesting that phi initiates apoptosis subsequent to cytosolic delivery. In comparison to wild-type virus, apoptosis-defective phi mutant viruses display diminished neurovirulence following intracranial inoculation of newborn mice. These results indicate that the phi domain of mu1 plays an important regulatory role in reovirus-induced apoptosis and disease.