Gene targeting by microRNAs is important in health and disease. We developed a functional assay for identifying microRNA targets and applied it to the K(+) channel K(ir)2.1 [KCNJ2 (potassium inwardly-rectifying channel, subfamily J, member 2)] which is dysregulated in cardiac and vascular disorders. The 3'UTR (untranslated region) was inserted downstream of the mCherry red fluorescent protein coding sequence in a mammalian expression plasmid. MicroRNA sequences were inserted into the pSM30 expression vector which provides enhanced green fluorescent protein as an indicator of microRNA expression. HEK (human embryonic kidney)-293 cells were co-transfected with the mCherry-3'UTR plasmid and a pSM30-based plasmid with a microRNA insert. The principle of the assay is that functional targeting of the 3'UTR by the microRNA results in a decrease in the red/green fluorescence intensity ratio as determined by automated image analysis. The method was validated with miR-1, a known down-regulator of K(ir)2.1 expression, and was used to investigate the targeting of the K(ir)2.1 3'UTR by miR-212. The red/green ratio was lower in miR-212-expressing cells compared with the non-targeting controls, an effect that was attenuated by mutating the predicted target site. miR-212 also reduced inward rectifier current and K(ir)2.1 protein in HeLa cells. This novel assay has several advantages over traditional luciferase-based assays including larger sample size, amenability to time course studies and adaptability to high-throughput screening.