West Nile virus (WNV) belongs to a group of medically important single-stranded, positive-sense RNA viruses causing deadly disease outbreaks around the world. The 3′ untranslated region (3′-UTR) of the flavivirus genome, in particular the terminal 3′ stem–loop (3′SL) fulfils multiple functions in virus replication and virus–host interactions. Using the Kunjin strain of WNV (WNVKUN), we detected a virally encoded small RNA, named KUN-miR-1, derived from 3′SL. Transcription of WNVKUN pre-miRNA (3′SL) in mosquito cells either from plasmid or Semliki Forest virus (SFV) RNA replicon resulted in the production of mature KUN-miR-1. Silencing of Dicer-1 but not Dicer-2 led to a reduction in the miRNA levels. Further, when a synthetic inhibitor of KUN-miR-1 was transfected into mosquito cells, replication of viral RNA was significantly reduced. Using cloning and bioinformatics approaches, we identified the cellular GATA4 mRNA as a target for KUN-miR-1. KUN-miR-1 produced in mosquito cells during virus infection or from plasmid DNA, SFV RNA replicon or mature miRNA duplex increased accumulation of GATA4 mRNA. Depletion of GATA4 mRNA by RNA silencing led to a significant reduction in virus RNA replication while a KUN-miR-1 RNA mimic enhanced replication of a mutant WNVKUN virus producing reduced amounts of KUN-miR-1, suggesting that GATA4-induction via KUN-miR-1 plays an important role in virus replication.