The let-7 miRNA and its target gene Lin-28 interact in a regulatory circuit controlling pluripotency. We investigated an additional let-7 target, mLin41 (mouse homologue of lin-41), as a potential contributor to this circuit. We demonstrate the presence of mLin41 protein in several stem cell niches, including the embryonic ectoderm, epidermis and male germ line. mLin41 colocalized to cytoplasmic foci with P-body markers and the miRNA pathway proteins Ago2, Mov10 and Tnrc6b. In co-precipitation assays, mLin41 interacted with Dicer and the Argonaute proteins Ago1, Ago2 and Ago4. Moreover, we show that mLin41 acts as an E3 ubiquitin ligase in an auto-ubiquitylation assay and that mLin41 mediates ubiquitylation of Ago2 in vitro and in vivo. Overexpression and depletion of mLin41 led to inverse changes in the level of Ago2 protein, implicating mLin41 in the regulation of Ago2 turnover. mLin41 interfered with silencing of target mRNAs for let-7 and miR-124, at least in part by antagonizing Ago2. Furthermore, mLin41 cooperated with the pluripotency factor Lin-28 in suppressing let-7 activity, revealing a dual control mechanism regulating let-7 in stem cells.