miR-122 is a liver-specific microRNA that positively regulates hepatitis C virus (HCV) RNA abundance and is essential for production of infectious HCV. Using a genetic approach, we show that its ability to enhance yields of infectious virus is dependent upon two miR-122-binding sites near the 5' end of the HCV genome, S1 and S2. Viral RNA with base substitutions in both S1 and S2 failed to produce infectious virus in transfected cells, while virus production was rescued to near-wild-type levels in cells supplemented with a complementary miR-122 mutant. A comparison of mutants with substitutions in only one site revealed S1 to be dominant, as an S2 but not S1 mutant produced high virus yields in cells supplemented with wild-type miR-122. Translation of HCV RNA was reduced over 50% by mutations in either S1 or S2 and was partially rescued by transfection of the complementary miR-122 mutant. Unlike the case for virus replication, however, both sites function equally in regulating translation. We conclude that miR-122 promotes replication by binding directly to both sites in the genomic RNA and, at least in part, by stimulating internal ribosome entry site (IRES)-mediated translation. However, a comparison of the replication capacities of the double-binding-site mutant and an IRES mutant with a quantitatively equivalent defect in translation suggests that the decrement in translation associated with loss of miR-122 binding is insufficient to explain the profound defect in virus production by the double mutant. miR-122 is thus likely to act at an additional step in the virus life cycle.