We present a complete study of the UV characteristics of the starburst knots in the inner 3 kpc region of NGC 1068 mapped by the International Ultraviolet Explorer (IUE) satellite. These knots likely represent the most luminous H II regions yet studied at optical and ultraviolet wavelengths. Comparisons indicate the brightest UV knot, knot 1, is 30 times brighter than NGC 604 in M33 and has a total luminosity greater-than-or-equal-to 10(43) ergs s-1. Moreover, the total observed flux of the UV knots at 1350 angstrom exceeds that of the nucleus of this nearby Seyfert 2 galaxy. The UV spectra clearly show that the starburst knots have undergone recent intense star formation. The stellar population of the knots is dominated by luminous B0-B1 supergiants with ages less than 10(7) yr. The spectra of the knots, especially those in the direction northeast of the nucleus, exhibit with very strong emission of N V, C IV, He II, and C III]. This emission does not arise from Wolf-Rayet stars as often seen in other star-forming regions. Rather, the spectrum of a very highly ionized extended nebular emission line region is superposed upon that of the UV knots. There is no evidence of excessive extinction by dust in the vicinity of the starburst knots. The interstellar extinction deduced from the UV data for the knots corresponds to an intrinsic E(B-V) = 0.15 assuming an LMC extinction law plus an additional Galactic foreground component of 0.03 mag. This is far less than the values of 0.3-0.6 inferred from data acquired at visual wavelengths. The low reddening deduced from the UV may reflect the preferential destruction of small dust grains in the inner disk of NGC 1068 as a result of supernova shocks and the intense EUV radiation field of both the central active galactic nucleus and the starburst knots. The UV data are compared to the morphologies of the IR disk, the CO ring, and the radio emission to investigate the nature of the star formation activity in the inner disk of this nearby Seyfert 2 galaxy.