Small noncoding RNAs, namely 20-24 nt microRNAs (miRNAs) and small interfering RNAs (siRNAs), play essential roles in plant development and defence. Currently the most useful approach for analysis of sRNA function is the sRNA sponge technologies developed based on the property of naturally occurring miRNA target mimicry RNAs in plants and animals. Here we report a new and robust sRNA sponge technology based on G:U base-paired hairpin RNA. We found that G:U hpRNA, unlike the perfectly base-paired hpRNA, accumulate as full-length molecules in the cytoplasm when transcribed in plant cells. We further demonstrated that transgenically expressed G:U hpRNA containing miRNA or siRNA target mimicry sequences in the loop region is highly effective at reducing miRNA or siRNA accumulation and inhibiting their function. We showed that this G:U hpRNA design is capable of inhibiting the function of a single miRNA individually or multiple miRNAs simultaneously causing strong miRNA-repressed phenotypes. Furthermore, we showed that the G:U hpRNA design is effective at inhibiting the function of a highly abundant siRNA of cucumber mosaic virus satellite RNA, preventing the yellowing disease symptoms in tobacco caused by the viral siRNA. In addition to miRNA sponge function, we showed that the dsRNA stem of G:U hpRNA induces effective RNAi against genes in plants and their pests and pathogens. We propose that the G:U hpRNA design will be useful as a dual function molecule, inducing RNAi via the dsRNA stem and inhibiting sRNA function via the loop.