Oral inoculation of reovirus type 3 Abney (T3A) into neonatal mice induces hepatitis and the biliary atresia-associated oily fur syndrome (OFS), a phenotype previously linked to the S1 gene. We found that following oral inoculation, none of three T3A mutants, JH2, JH3, and JH4, containing different single amino acid substitutions in the M2 gene, induced the OFS or extensive liver necrosis. Similarly, reassortant viruses containing both a JH4-S1 and a JH4-M2 gene segment did not induce the OFS, whereas another reassortant containing a JH4-S1 gene and a M2 gene from reovirus type 3 Dearing fully recovered this capacity. Together, these results constitute the first evidence for the involvement of the M2 gene in the S1 gene-associated capacity of T3A to induce hepatobiliary disease in neonatal mice.