A new flavivirus, Ecuador Paraiso Escondido virus (EPEV), named after the village where it was discovered, was isolated from sand flies (Psathyromyia abonnenci, formerly Lutzomyia abonnenci) that are unique to the New World. This represents the first sand fly-borne flavivirus identified in the New World. EPEV exhibited a typical flavivirus genome organization. Nevertheless, the maximum pairwise amino acid sequence identity with currently recognized flaviviruses was 52.8%. Phylogenetic analysis of the complete coding sequence showed that EPEV represents a distinct clade which diverged from a lineage that was ancestral to the nonvectored flaviviruses Entebbe bat virus, Yokose virus, and Sokoluk virus and also the Aedes-associated mosquito-borne flaviviruses, which include yellow fever virus, Sepik virus, Saboya virus, and others. EPEV replicated in C6/36 mosquito cells, yielding high infectious titers, but failed to reproduce either in vertebrate cell lines (Vero, BHK, SW13, and XTC cells) or in suckling mouse brains. This surprising result, which appears to eliminate an association with vertebrate hosts in the life cycle of EPEV, is discussed in the context of the evolutionary origins of EPEV in the New World.