Disclosed are Fc-interferon-beta (Fc-IFN-β) fusion proteins and nucleic acid molecules encoding them. The Fc-IFN-β fusion proteins include variants of the interferon-beta (IFN-β) protein that are altered to achieve enhanced biological activity, prolonged circulating half-life and greater solubility. Also disclosed are methods of producing the fusion proteins and methods of using the fusion proteins and/or nucleic acid molecules for treating diseases and conditions alleviated by the administration of interferon-beta.