Increasing evidence has shown that the stem-loop (SL) structures in the NS5B coding region of hepatitis C virus (HCV) function as cis-replicating elements that are indispensable for viral replication. We have investigated whether small RNA molecules analogous to the SL structures could inhibit HCV replication. Reporter assays showed that both in vitro transcribed and pol III-directed transcripts corresponding to 5BSL3.1 and 5BSL3.2 efficiently inhibited HCV replicon-encoded luciferase expression. Mutagenesis studies revealed that mutation in 5BSL3.2 which debilitated its binding to NS5B also abolished the ability of 5BSL3.2 RNA to inhibit HCV replication, suggesting that SL RNA inhibits HCV by sequestering the replication complex. Further, adenoviral-mediated expression of the SL RNAs potently blocked the replication of HCV replicon in Huh-7 cells. Importantly, SL RNAs derived from HCV 2a, an evolutionarily distant genotype, were also shown to suppress the replication of HCV 1b replicon in spite of the genetic heterogeneity between the SL elements of the two viruses, implying the potential of SL RNA-based approach to inhibit a wide range of HCV isolates. These results suggest that SL RNA decoys may prove to be useful in the treatment of hepatitis C, which may be advantageous over other sequence-specific gene therapy modalities (such as antisense RNA and siRNA) in preventing the escape of genetic variants.