In bilaterians, which comprise most of extant animals, microRNAs (miRNAs) regulate the majority of messenger RNAs (mRNAs) via base-pairing of a short sequence (the miRNA "seed") to the target, subsequently promoting translational inhibition and transcript instability. In plants, many miRNAs guide endonucleolytic cleavage of highly complementary targets. Because little is known about miRNA function in nonbilaterian animals, we investigated the repertoire and biological activity of miRNAs in the sea anemone Nematostella vectensis, a representative of Cnidaria, the sister phylum of Bilateria. Our work uncovers scores of novel miRNAs in Nematostella, increasing the total miRNA gene count to 87. Yet only a handful are conserved in corals and hydras, suggesting that microRNA gene turnover in Cnidaria greatly exceeds that of other metazoan groups. We further show that Nematostella miRNAs frequently direct the cleavage of their mRNA targets via nearly perfect complementarity. This mode of action resembles that of small interfering RNAs (siRNAs) and plant miRNAs. It appears to be common in Cnidaria, as several of the miRNA target sites are conserved among distantly related anemone species, and we also detected miRNA-directed cleavage in Hydra. Unlike in bilaterians, Nematostella miRNAs are commonly coexpressed with their target transcripts. In light of these findings, we propose that post-transcriptional regulation by miRNAs functions differently in Cnidaria and Bilateria. The similar, siRNA-like mode of action of miRNAs in Cnidaria and plants suggests that this may be an ancestral state.