Many viruses encode microRNAs (miRNAs) that are small non-coding single-stranded RNAs which play critical roles in virus-host interactions. Porcine reproductive and respiratory syndrome virus (PRRSV) is one of the most economically impactful viruses in the swine industry. The present study sought to determine whether PRRSV encodes miRNAs that could regulate PRRSV replication. Four viral small RNAs (vsRNAs) were mapped to the stem-loop structures in the ORF1a, ORF1b and GP2a regions of the PRRSV genome by bioinformatics prediction and experimental verification. Of these, the structures with the lowest minimum free energy (MFE) values predicted for PRRSV-vsRNA1 corresponded to typical stem-loop, hairpin structures. Inhibition of PRRSV-vsRNA1 function led to significant increases in viral replication. Transfection with PRRSV-vsRNA1 mimics significantly inhibited PRRSV replication in primary porcine alveolar macrophages (PAMs). The time-dependent increase in the abundance of PRRSV-vsRNA1 mirrored the gradual upregulation of PRRSV RNA expression. Knockdown of proteins associated with cellular miRNA biogenesis demonstrated that Drosha and Argonaute (Ago2) are involved in PRRSV-vsRNA1 biogenesis. Moreover, PRRSV-vsRNA1 bound specifically to the nonstructural protein 2 (NSP2)-coding sequence of PRRSV genome RNA. Collectively, the results reveal that PRRSV encodes a functional PRRSV-vsRNA1 which auto-regulates PRRSV replication by directly targeting and suppressing viral NSP2 gene expression. These findings not only provide new insights into the mechanism of the pathogenesis of PRRSV, but also explore a potential avenue for controlling PRRSV infection using viral small RNAs.