MicroRNAs (miRNAs) are versatile regulators of gene expression and undergo complex maturation processes. However, the mechanism(s) stabilizing or reducing these small RNAs remains poorly understood. Here we identify mammalian immune regulator MCPIP1 (Zc3h12a) ribonuclease as a broad suppressor of miRNA activity and biogenesis, which counteracts Dicer, a central ribonuclease in miRNA processing. MCPIP1 suppresses miRNA biosynthesis via cleavage of the terminal loops of precursor miRNAs (pre-miRNAs). MCPIP1 also carries a vertebrate-specific oligomerization domain important for pre-miRNA recognition, indicating its recent evolution. Furthermore, we observed potential antagonism between MCPIP1 and Dicer function in human cancer and found a regulatory role of MCPIP1 in the signaling axis comprising miR-155 and its target c-Maf. These results collectively suggest that the balance between processing and destroying ribonucleases modulates miRNA biogenesis and potentially affects pathological miRNA dysregulation. The presence of this abortive processing machinery and diversity of MCPIP1-related genes may imply a dynamic evolutional transition of the RNA silencing system.