We describe the isolation and characterization of a novel flavivirus, isolated from a pool of Culex (Melanoconion) ocossa Dyar and Knab mosquitoes collected in 2009 in an urban area of the Amazon basin city of Iquitos, Peru. Flavivirus infection was detected by indirect immunofluorescent assay of inoculated C6/36 cells using polyclonal flavivirus antibodies (St. Louis encephalitis virus, yellow fever virus and dengue virus type 1) and confirmed by RT-PCR. Based on partial sequencing of the E and NS5 gene regions, the virus isolate was most closely related to the mosquito-borne flaviviruses but divergent from known species, with less than 45 and 71% pairwise amino acid identity in the E and NS5 gene products, respectively. Phylogenetic analysis of E and NS5 amino acid sequences demonstrated that this flavivirus grouped with mosquito-borne flaviviruses, forming a clade with Nounané virus (NOUV). Like NOUV, no replication was detected in a variety of mammalian cells (Vero-76, Vero-E6, BHK, LLCMK, MDCK, A549 and RD) or in intracerebrally inoculated newborn mice. We tentatively designate this genetically distinct flavivirus as representing a novel species, Nanay virus, after the river near where it was first detected.