Recent evidence suggests that animal microRNAs (miRNAs) can target coding sequences (CDSs); however, the pathophysiological importance of such targeting remains unknown. Here, we show that a somatic heterozygous missense mutation (c.402C>G; p.C134W) in FOXL2, a feature shared by virtually all adult-type granulosa cell tumors (AGCTs), introduces a target site for miR-1236, which causes haploinsufficiency of the tumor-suppressor FOXL2. This miR-1236-mediated selective degradation of the variant FOXL2 mRNA is preferentially conducted by a distinct miRNAloaded RNA-induced silencing complex (miRISC) directed by the Argonaute3 (AGO3) and DHX9 proteins. In both patients and a mouse model of AGCT, abundance of the inversely regulated variant FOXL2 with miR-1236 levels is highly correlated with malignant features of AGCT. Our study provides a molecular basis for understanding the conserved FOXL2 CDS mutation-mediated etiology of AGCT, revealing the existence of a previously unidentified mechanism of miRNA-targeting disease-associated mutations in the CDS by forming a non-canonical miRISC.