Recent evidence suggests that animal microRNAs (miRNAs) can target coding sequences (CDSs); however, the pathophysiological importance of such targeting remains unknown. Here, we show that a somatic heterozygous missense mutation (c.402C>G; p.C134W) in FOXL2, a feature shared by virtually all adult‐type granulosa cell tumors (AGCTs), introduces a target site for miR‐1236, which causes haploinsufficiency of the tumor‐suppressor FOXL2. This miR‐1236‐mediated selective degradation of the variant FOXL2 mRNA is preferentially conducted by a distinct miRNA‐loaded RNA‐induced silencing complex (miRISC) directed by the Argonaute3 (AGO3) and DHX9 proteins. In both patients and a mouse model of AGCT, abundance of the inversely regulated variant FOXL2 with miR‐1236 levels is highly correlated with malignant features of AGCT. Our study provides a molecular basis for understanding the conserved FOXL2 CDS mutation‐mediated etiology of AGCT, revealing the existence of a previously unidentified mechanism of miRNA‐targeting disease‐associated mutations in the CDS by forming a non‐canonical miRISC. SYNOPSIS An alternative miRNA‐loaded RNA‐induced silencing complex (miRISC) comprising AGO3, DHX9 and miR‐1236 targets a conserved coding sequence mutation site in the tumor suppressor FOXL2, which is found in nearly all patients that have adult‐type granulosa cell tumors. This leads to specific decay of the mutated FOXL2 mRNA. Patients with an adult‐type granulosa cell tumor that contains a somatic missense mutation of FOXL2 (c.402C> G; p.C134W) exhibit an allelic imbalance of heterozygous FOXL2 mRNAs. miR‐1236 causes the decay of the mutated variant FOXL2 mRNA, but not the wild‐type FOXL2 mRNA, by targeting the 402C> G mutation site in the coding sequence. A non‐canonical miRISC complex comprising AGO3 and DHX9 preferentially targets mutated FOXL2 mRNA variant in the coding region. miR‐1236 acts as an oncomiR for adult‐type granulosa cell tumor development by causing haploinsufficiency of the tumor suppressor FOXL2. A cancer mutation introduces a novel miR‐1236 target site in FOXL2 mRNA, causing its miRNA‐mediated decay and leading to FOXL2 tumor suppressor haploinsufficiency.