In animals, microRNAs (miRNAs) generally repress gene expression by binding to sites in the 3'-untranslated region (UTR) of target mRNAs. miRNAs have also been reported to repress or activate gene expression by binding to 5'-UTR sites, but the extent of such regulation and the factors that govern these different responses are unknown. Liver-specific miR-122 binds to sites in the 5'-UTR of hepatitis C virus (HCV) RNA and positively regulates the viral life cycle, in part by stimulating HCV translation. Here, we characterize the features that allow miR-122 to activate translation via the HCV 5'-UTR. We find that this regulation is a highly specialized process that requires uncapped RNA, the HCV internal ribosome entry site (IRES) and the 3' region of miR-122. Translation activation does not involve a previously proposed structural transition in the HCV IRES and is mediated by Argonaute proteins. This study provides an important insight into the requirements for the miR-122-HCV interaction, and the broader consequences of miRNAs binding to 5'-UTR sites.