Genetic defects in the microRNA (miRNA) generating enzyme, dicer, are increasingly linked to disease. Loss of miRNA in dicer deficiency is thought to be due to loss of miRNA-generating activity. Here, we demonstrate a catabolic mechanism driving miRNA depletion in dicer deficiency. We developed a Dicer-antagonist assay revealing a pre-miRNA degrading enzyme that competes with pre-miRNA processing. We purified this pre-miRNA degrading activity using an unbiased chromatographic procedure and identified the ribonuclease complex Translin/Trax (TN/TX). In wild-type dicer backgrounds, pre-miRNA processing was dominant. However, in dicer-deficient contexts, TN/TX broadly suppressed miRNA. These findings indicate that miRNA depletion in dicer deficiency is due to the combined loss of miRNA-generating activity and catabolic function of TN/TX. Importantly, inhibition of TN/TX mitigated loss of both miRNA and tumor suppression with dicer haploinsufficiency. These studies reveal a potentially druggable target for restoring miRNA function in cancers and emerging dicer deficiencies.