Zika virus (ZIKV) infects pregnant women and causes devastating congenital zika syndrome (CZS). How the virus is vertically transmitted to the fetus and induces neuronal loss remains unclear. We previously reported that Pellino (Peli)1, an E3 ubiquitin ligase, promotes p38MAPK activation in microglia and induction of lethal encephalitis by facilitating the replication of West Nile virus (WNV), a closely related flavivirus. Here, we found that Peli1 expression was induced on ZIKV-infected human monocytic cells, peripheral blood mononuclear cells, human first-trimester placental trophoblasts, and neural stem cell (hNSC)s. Peli1 mediates ZIKV cell attachment, entry and viral translation and its expression is confined to the endoplasmic reticulum. Moreover, Peli1 mediated inflammatory cytokine and chemokine responses and induced cell death in placental trophoblasts and hNSCs. ZIKV-infected pregnant mice lacking Peli1 signaling had reduced placental inflammation and tissue damage, which resulted in attenuated congenital abnormalities. Smaducin-6, a membrane-tethered Smad6-derived peptide, blocked Peli1-mediated NF-κB activation but did not have direct effects on ZIKV infection. Smaducin-6 reduced inflammatory responses and cell death in placental trophoblasts and hNSCs, and diminished placental inflammation and damage, leading to attenuated congenital malformations in mice. Collectively, our results reveal a novel role of Peli1 in flavivirus pathogenesis and suggest that Peli1 promotes ZIKV vertical transmission and neuronal loss by mediating inflammatory cytokine responses and induction of cell death. Our results also identify Smaducin-6 as a potential therapeutic candidate for treatment of CZS.