MicroRNAs (miRNAs) are small noncoding RNAs that regulate eukaryotic gene expression by binding to regions of imperfect complementarity in mRNAs, typically in the 3' UTR, recruiting an Argonaute (Ago) protein complex that usually results in translational repression or destabilization of the target RNA. The translation and decay of mRNAs are closely linked, competing processes, and whether the miRNA-induced silencing complex (RISC) acts primarily to reduce translation or stability of the mRNA remains controversial. miR-122 is an abundant, liver-specific miRNA that is an unusual host factor for hepatitis C virus (HCV), an important cause of liver disease in humans. Prior studies show that it binds the 5' UTR of the messenger-sense HCV RNA genome, stimulating translation and promoting genome replication by an unknown mechanism. Here we show that miR-122 binds HCV RNA in association with Ago2 and that this slows decay of the viral genome in infected cells. The stabilizing action of miR-122 does not require the viral RNA to be translationally active nor engaged in replication, and can be functionally substituted by a nonmethylated 5' cap. Our data demonstrate that a RISC-like complex mediates the stability of HCV RNA and suggest that Ago2 and miR-122 act coordinately to protect the viral genome from 5' exonuclease activity of the host mRNA decay machinery. miR-122 thus acts in an unconventional fashion to stabilize HCV RNA and slow its decay, expanding the repertoire of mechanisms by which miRNAs modulate gene expression.