The DExD/H box RNA helicases retinoic acid-inducible gene-I (RIG-I) and melanoma differentiation associated gene-5 (mda-5) sense viral RNA in the cytoplasm of infected cells and activate signal transduction pathways that trigger the production of type I interferons (IFNs). Laboratory of genetics and physiology 2 (LGP2) is thought to influence IFN production by regulating the activity of RIG-I and mda-5, although its mechanism of action is not known and its function is controversial. Here we show that expression of LGP2 potentiates IFN induction by polyinosinic-polycytidylic acid [poly(I:C)], commonly used as a synthetic mimic of viral dsRNA, and that this is particularly significant at limited levels of the inducer. The observed enhancement is mediated through co-operation with mda-5, which depends upon LGP2 for maximal activation in response to poly(I:C). This co-operation is dependent upon dsRNA binding by LGP2, and the presence of helicase domain IV, both of which are required for LGP2 to interact with mda-5. In contrast, although RIG-I can also be activated by poly(I:C), LGP2 does not have the ability to enhance IFN induction by RIG-I, and instead acts as an inhibitor of RIG-I-dependent poly(I:C) signaling. Thus the level of LGP2 expression is a critical factor in determining the cellular sensitivity to induction by dsRNA, and this may be important for rapid activation of the IFN response at early times post-infection when the levels of inducer are low.