Hepatitis C virus (HCV) replication requires annealing of a liver specific small-RNA, miR-122 to 2 sites on 5′ untranslated region (UTR). Annealing has been reported to (a) stabilize the genome, (b) stimulate translation and (c) promote the formation of translationally active Internal Ribosome Entry Site (IRES) RNA structure. In this report, we map the RNA element to which small RNA annealing promotes HCV to nucleotides 1–44 and identify the relative impact of small RNA annealing on virus translation promotion and genome stabilization. We mapped the optimal region on the HCV genome to which small RNA annealing promotes virus replication to nucleotides 19–37 and found the efficiency of viral RNA accumulation decreased as annealing moved away from this region. Then, by using a panel of small RNAs that promote replication with varying efficiencies we link the efficiency of lifecycle promotion with translation stimulation. By contrast small RNA annealing stabilized the viral genome even if they did not promote virus replication. Thus, we propose that miR-122 annealing promotes HCV replication by annealing to an RNA element that activates the HCV IRES and stimulates translation, and that miR-122 induced HCV genome stabilization is insufficient alone but enhances virus replication.