Flock House virus (FHV) is a positive-sense RNA insect virus with a bipartite genome. RNA1 encodes the RNA-dependent RNA polymerase, and RNA2 encodes the capsid protein. A third protein, B2, is translated from a subgenomic RNA3 derived from the 3' end of RNA1. B2 is a double-stranded RNA (dsRNA) binding protein that inhibits RNA silencing, a major antiviral defense pathway in insects. FHV is conveniently propagated in Drosophila melanogaster cells but can also be grown in mammalian cells. It was previously reported that B2 is dispensable for FHV RNA replication in BHK21 cells; therefore, we chose this cell line to generate a viral mutant that lacked the ability to produce B2. Consistent with published results, we found that RNA replication was indeed vigorous but the yield of progeny virus was negligible. Closer inspection revealed that infected cells contained very small amounts of coat protein despite an abundance of RNA2. B2 mutants that had reduced affinity for dsRNA produced analogous results, suggesting that the dsRNA binding capacity of B2 somehow played a role in coat protein synthesis. Using fluorescence in situ hybridization of FHV RNAs, we discovered that RNA2 is recruited into large cytoplasmic granules in the absence of B2, whereas the distribution of RNA1 remains largely unaffected. We conclude that B2, by binding to double-stranded regions in progeny RNA2, prevents recruitment of RNA2 into cellular structures, where it is translationally silenced. This represents a novel function of B2 that further contributes to successful completion of the nodaviral life cycle.