Highly pathogenic avian influenza virus H5N8 clade 22.214.171.124 caused outbreaks in poultry at an unprecedented global scale. The virus was spread by wild birds in Asia in two waves: clade 126.96.36.199A in 2014/2015 and clade 188.8.131.52B from 2016 up to today. Both clades were highly virulent in chickens, but only clade B viruses exhibited high virulence in ducks. Viral factors which contribute to virulence and transmission of these panzootic H5N8 184.108.40.206 viruses are largely unknown. The NS1 protein, typically composed of 230 amino acids (aa), is a multifunctional protein which is also a pathogenicity factor. Here, we studied the evolutionary trajectory of H5N8 NS1 proteins from 2013 to 2019 and their role in the fitness of H5N8 viruses in chickens and ducks. Sequence analysis and in vitro experiments indicated that clade 220.127.116.11A and clade 18.104.22.168B viruses have a preference for NS1 of 237 aa and 217 aa, respectively, over NS1 of 230 aa. NS217 was exclusively seen in domestic and wild birds in Europe. The extension of the NS1 C terminus (CTE) of clade B virus reduced virus transmission and replication in chickens and ducks and partially impaired the systemic tropism to the endothelium in ducks. Conversely, lower impact on fitness of clade A virus was observed. Remarkably, the NS1 of clade A and clade B, regardless of length, was efficient in blocking interferon (IFN) induction in infected chickens, and changes in the NS1 C terminus reduced the efficiency for interferon antagonism. Together, the NS1 C terminus contributes to the efficient transmission and high fitness of H5N8 viruses in chickens and ducks.