In order to investigate the biodiversity of viruses in Australian mosquitoes, we screened archival mosquito homogenates for novel viruses. Bamaga virus (BgV), a new species of flavivirus, was discovered in Culex annulirostris collected from northern Australia and subsequently characterized. Phylogenetic analysis of the complete sequence of the BgV genome revealed it clustered with the vertebrate-infecting flaviviruses (VIFs), in particular the yellow fever virus group, and was most closely related to Edge Hill virus, another Australian flavivirus (61.9% nt and 63.7% aa identity). However, in contrast to other VIFs, BgV displayed restricted growth in a range of vertebrate cell lines with no or relatively slow replication in inoculated cultures, suggesting a singularly narrow host-range. Additionally, it was shown that BgV infection is greatly influenced by temperature, since its replication can be rescued in all vertebrate cell lines tested when incubated at 34°C instead of the standard 37°C. We generated a BgV infectious clone and two chimeras with either a BgV backbone and WNVKUN prME structural genes or a WNVKUN backbone and BgV structural genes with the CPEC technology and showed that the prME genes are not involved in BgV temperature-dependent host-restriction. We have also shown that binding/entry of BgV into vertebrate cells is inefficient and might be facilitated by non-specific interactions with proteins like GAG. BgV displayed restricted replication in vivo, notably in virus-challenged mice (intraperitoneally and intracranially) and the WNVKUNchimera with BgV prME was attenuated compared to the WNVFLSDX infectious clone. BgV was shown to interfere with Murray Valley encephalitis and WNVNSW2011in vitro and in vivo. Our results indicate that BgV is an evolutionary divergent member of mosquito-borne flaviviruses that represents a unique model virus to study mechanisms of flavivirus host-restriction and transmission.