The flaviviruses tick-borne encephalitis virus (TBEV) and louping ill virus (LIV) are closely-related genetically and antigenically, have broadly similar host ranges that include rodents and other mammals (including sheep), and are both transmitted by the same tick species, Ixodes ricinus. Although human infection with TBEV results in a febrile illness followed in some cases by encephalitis, humans appear to be much less susceptible to infection with LIV. However, these viruses demonstrate different susceptibilities in sheep; LIV infection causes encephalitic disease, whereas TBEV infection generally does not. To investigate the role of the immune response in this mixed outcome, groups of sheep were inoculated with either virus, or with a primary inoculation with one virus and secondary inoculation with the other. Markers of both adaptive and innate immune responses were measured. In each group studied, infection resulted in seroconversion, demonstrated by the detection of virus specific neutralising antibodies. This appeared to control infection with TBEV but not LIV, which progressed to a febrile infection, with transient viraemia and elevated levels of serum interferon. This was followed by neuroinvasion, leading to up-regulation of innate immune transcripts in discrete areas of the brain, including interferon inducible genes and chemokines. Prior inoculation with TBEV did not prevent infection with LIV, but did appear to reduce disease severity and viraemia. We postulate that LIV has adapted to replicate efficiently in sheep cells, and disseminate rapidly following infection. By contrast, TBEV fails to disseminate in sheep and is controlled by the immune response.