Hepatitis C virus (HCV) replication is dependent on microRNA 122 (miR-122), a liver-specific microRNA that recruits Argonaute 2 to the 5' end of the viral genome, stabilizing it and slowing its decay both in cell-free reactions and in infected cells. Here we describe the RNA degradation pathways against which miR-122 provides protection. Transfected HCV RNA is degraded by both the 5' exonuclease Xrn1 and 3' exonuclease exosome complex, whereas replicating RNA within infected cells is degraded primarily by Xrn1 with no contribution from the exosome. Consistent with this, sequencing of the 5' and 3' ends of RNA degradation intermediates in infected cells confirmed that 5' decay is the primary pathway for HCV RNA degradation. Xrn1 knockdown enhances HCV replication, indicating that Xrn1 decay and the viral replicase compete to set RNA abundance within infected cells. Xrn1 knockdown and miR-122 supplementation have equal, redundant, and nonadditive effects on the rate of viral RNA decay, indicating that miR-122 protects HCV RNA from 5' decay. Nevertheless, Xrn1 knockdown does not rescue replication of a viral mutant defective in miR-122 binding, indicating that miR-122 has additional yet uncharacterized function(s) in the viral life cycle.