Fungal viruses are widespread in fungi infecting plants, insects and animals. High-throughput sequencing has rapidly led to the discovery of fungal viruses. However, the interactive exploration between fungi and viruses is relatively limited. RNA silencing is the fundamental antivirus pathway in fungi. Fusarium graminearum small RNA (sRNA) pattern was regulated by Fusarium graminearum hypovirus 1 (FgHV1) infection, indicating the activation of RNA silencing in virus defense. In this study, we focused on the function of an uncharacterized protein sized at 20 kD (p20) encoded by FgHV1. In the agro-infiltration assay, p20 was identified as a novel fungal RNA silencing suppressor. p20 can block systemic RNA silencing signals besides local RNA silencing suppression. We further elucidated the RNA silencing suppression mechanism of p20. The single-strand sRNA, instead of double-strand sRNA, can be incorporated by p20 in electrophoretic mobility shift assay. p20 binds sRNA originating from virus and non-virus sources in a non-sequence-specific manner. In addition, The F. graminearum 22 and 23-nt sRNA abundance and pathways related to RNA processing and redox regulation were regulated by p20. Our study revealed the first fungal virus-encoded RNA silencing suppressor with sRNA binding capability.