A reassortant avian influenza virus (designated FPV NS GD), carrying the NS-segment of the highly pathogenic avian influenza virus (HPAIV) strain A/Goose/Guangdong/1/96 (GD; H5N1) in the genetic background of the HPAIV strain A/FPV/Rostock/34 (FPV; H7N1), was rescued by reverse genetics. Remarkably, in contrast to the recombinant wild-type FPV (rFPV), the reassortant virus was able to replicate more efficiently in different human cell lines and primary mouse epithelia cells without prior adaptation. Moreover, FPV NS GD caused disease and death in experimentally infected mice and was detected in mouse lungs; in contrast, rFPV was not able to replicate in mice effectively. These results indicated an altered host range and increased virulence. Furthermore FPV NS GD showed pronounced pathogenicity in chicken embryos. In an attempt to define the molecular basis for the apparent differences, we determined that NS1 proteins of the H5N1 and H7N1 strains bound the antiviral kinase PKR and the F2F3 domain of cleavage and polyadenylation specificity factor 30 (CPSF30) with comparable efficiencies in vitro. However, FPV NS GD infection resulted in (i) increased expression of NS1, (ii) faster and stronger PKR inhibition, and (iii) stronger beta interferon promoter inhibition than rFPV. Taken together, the results shed further light on the importance of the NS segment of an H5N1 strain for viral replication, molecular pathogenicity, and host range of HPAIVs and the possible consequences of a reassortment between naturally occurring H7 and H5 type HPAIVs.