MicroRNAs (miRNAs) silence gene expression by binding 3' untranslated regions of target mRNAs. Recent studies suggested silencing is achieved through either recruitment of eIF6, which prevents ribosome assembly, or displacement of eIF4E from the mRNA 5' cap structure. Using Drosophila melanogaster cells, we show that eIF6 is not required for silencing. In contrast, silencing is abolished by mutating Argonaute 1 (AGO1) at two conserved phenylalanine residues predicted to mediate binding to the cap structure. Notably, we found these mutations also prevented AGO1 from interacting with GW182 and miRNAs, indicating that the essential role of these residues is unrelated to cap binding. Consistently, depleting GW182 or overexpressing its AGO1 binding domain relieved silencing of all reporters tested, including those lacking a poly(A) tail. Together, our findings show that miRNA function is effected by AGO1-GW182 complexes and the role of GW182 in silencing goes beyond promoting deadenylation.