The 5' and the 3' untranslated regions (UTR) of the insulin genes are very well conserved across species. Although microRNAs (miRNAs) are known to regulate insulin secretion process, direct regulation of insulin biosynthesis by miRNA has not been reported. Here, we show that mouse microRNA miR-196b can specifically target the 5'UTR of the long insulin2 splice isoform. Using reporter assays we show that miR-196b specifically increases the translation of the reporter protein luciferase. We further show that this translation activation is abolished when Argonaute 2 levels are knocked down after transfection with an Argonaute 2-directed siRNA. Binding of miR-196b to the target sequence in insulin 5'UTR causes the removal of HuD (a 5'UTR-associated translation inhibitor), suggesting that both miR-196b and HuD bind to the same RNA element. We present data suggesting that the RNA-binding protein HuD, which represses insulin translation, is displaced by miR-196b. Together, our findings identify a mechanism of post-transcriptional regulation of insulin biosynthesis.