MicroRNAs (miRNAs) are 20–24 nt non-coding RNAs that play important regulatory roles in a broad range of eukaryotes by pairing with mRNAs to direct post-transcriptional repression. The mechanistic details of miRNA-mediated post-transcriptional regulation have been well documented in multicellular model organisms. However, this process remains poorly studied in algae such as Chlamydomonas reinhardtii, and specific features of miRNA biogenesis, target mRNA recognition and subsequent silencing are not well understood. In this study, we report on the characterization of a Chlamydomonas miRNA, cre-miR1174.2, , which is processed from a near-perfect hairpin RNA. Using Gaussia luciferase (gluc) reporter genes, we have demonstrated that cre-miR1174.2 is functional in Chlamydomonas and capable of triggering site-specific cleavage at the center of a perfectly complementary target sequence. A mismatch tolerance test assay, based on pools of transgenic strains, revealed that target hybridization to nucleotides of the seed region, at the 5′ end of an miRNA, was sufficient to induce moderate repression of expression. In contrast, pairing to the 3′ region of the miRNA was not critical for silencing. Our results suggest that the base-pairing requirements for small RNA-mediated repression in C. reinhardtii are more similar to those of metazoans compared with the extensive complementarity that is typical of land plants. Individual Chlamydomonas miRNAs may potentially modulate the expression of numerous endogenous targets as a result of these relaxed base-pairing requirements.