Schmallenberg virus (SBV) is an emerging orthobunyavirus of ruminants associated with outbreaks of congenital malformations in aborted and stillborn animals. Since its discovery in November 2011, SBV has spread very rapidly to many European countries. Here, we developed molecular and serological tools, and an experimental in vivo model as a platform to study SBV pathogenesis, tropism and virus-host cell interactions. Using a synthetic biology approach, we developed a reverse genetics system for the rapid rescue and genetic manipulation of SBV. We showed that SBV has a wide tropism in cell culture and “synthetic” SBV replicates in vitro as efficiently as wild type virus. We developed an experimental mouse model to study SBV infection and showed that this virus replicates abundantly in neurons where it causes cerebral malacia and vacuolation of the cerebral cortex. These virus-induced acute lesions are useful in understanding the progression from vacuolation to porencephaly and extensive tissue destruction, often observed in aborted lambs and calves in naturally occurring Schmallenberg cases. Indeed, we detected high levels of SBV antigens in the neurons of the gray matter of brain and spinal cord of naturally affected lambs and calves, suggesting that muscular hypoplasia observed in SBV-infected lambs is mostly secondary to central nervous system damage. Finally, we investigated the molecular determinants of SBV virulence. Interestingly, we found a biological SBV clone that after passage in cell culture displays increased virulence in mice. We also found that a SBV deletion mutant of the non-structural NSs protein (SBVΔNSs) is less virulent in mice than wild type SBV. Attenuation of SBV virulence depends on the inability of SBVΔNSs to block IFN synthesis in virus infected cells. In conclusion, this work provides a useful experimental framework to study the biology and pathogenesis of SBV.