Coevolution of viruses and their hosts may lead to viral strategies to avoid, evade, or suppress antiviral immunity. An example is antiviral RNA interference (RNAi) in insects: the host RNAi machinery processes viral double-stranded RNA into small interfering RNAs (siRNAs) to suppress viral replication, whereas insect viruses encode suppressors of RNAi, many of which inhibit viral small interfering RNA (vsiRNA) production. Yet, many studies have analyzed viral RNAi suppressors in heterologous systems, due to the lack of experimental systems to manipulate the viral genome of interest, raising questions about in vivo functions of RNAi suppressors. To address this caveat, we generated an RNAi suppressor-defective mutant of invertebrate iridescent virus 6 (IIV6), a large DNA virus in which we previously identified the 340R protein as a suppressor of RNAi. Loss of 340R did not affect vsiRNA production, indicating that 340R binds siRNA duplexes to prevent RNA-induced silencing complex assembly. Indeed, vsiRNAs were not efficiently loaded into Argonaute 2 during wild-type IIV6 infection. Moreover, IIV6 induced a limited set of mature microRNAs in a 340R-dependent manner, most notably miR-305–3p, which we attribute to stabilization of the miR-305–5p:3p duplex by 340R. The IIV6 340R deletion mutant did not have a replication defect in cells, but was strongly attenuated in adult Drosophila . This in vivo replication defect was completely rescued in RNAi mutant flies, indicating that 340R is a bona fide RNAi suppressor, the absence of which uncovers a potent antiviral immune response that suppresses virus accumulation ∼100-fold. Together, our work indicates that viral RNAi suppressors may completely mask antiviral immunity.