Emerging evidence from the current outbreak of Zika virus (ZIKV) indicates a strong causal link between Zika and microcephaly. To investigate how ZIKV infection leads to microcephaly, we used human embryonic stem cell-derived cerebral organoids to recapitulate early stage, first trimester fetal brain development. Here we show that a prototype strain of ZIKV, MR766, efficiently infects organoids and causes a decrease in overall organoid size that correlates with the kinetics of viral copy number. The innate immune receptor Toll-like-Receptor 3 (TLR3) was upregulated after ZIKV infection of human organoids and mouse neurospheres and TLR3 inhibition reduced the phenotypic effects of ZIKV infection. Pathway analysis of gene expression changes during TLR3 activation highlighted 41 genes also related to neuronal development, suggesting a mechanistic connection to disrupted neurogenesis. Together, therefore, our findings identify a link between ZIKV-mediated TLR3 activation, perturbed cell fate, and a reduction in organoid volume reminiscent of microcephaly. Display omitted •hESC-derived cerebral organoids model fetal brain development•Zika virus infects neural progenitor cells in organoid and neurosphere models•Zika virus activates Toll-like receptor 3 in cerebral organoids•TLR3 triggers apoptosis and attenuates neurogenesis Dang et al. show that Zika virus (ZIKV) attenuates growth in cerebral organoids from human embryonic stem cells by targeting neural progenitors. ZIKV activates the TLR3-mediated innate immune response, leading to dysregulation of a network of genes involved in neurogenesis, axon guidance, apoptosis, and differentiation.