A major challenge to our understanding of translational control has been deconvolving the individual impact specific regulatory factors have on the complex dynamics of mRNA translation. MicroRNAs (miRNAs), for example, guide Argonaute and associated proteins to target mRNAs, where they direct gene silencing in multiple ways that are not well understood. To better deconvolve these dynamics, we have developed technology to directly visualize and quantify the impact of human Argonaute2 (Ago2) on the translation and subcellular localization of individual reporter mRNAs in living cells. We show that our combined translation and Ago2 tethering sensor reflects endogenous miRNA-mediated gene silencing. Using the sensor, we find that Ago2 association leads to progressive silencing of translation at individual mRNA. Silencing was occasionally interrupted by brief bursts of translational activity and took 3–4 times longer than a single round of translation, consistent with a gradual increase in the inhibition of translation initiation. At later time points, Ago2-tethered mRNAs cluster and coalesce with P-bodies, where a translationally silent state is maintained. These results provide a framework for exploring miRNA-mediated gene regulation in live cells at the single-molecule level. Furthermore, our tethering-based, single-molecule reporter system will likely have wide-ranging application in studying RNA-protein interactions.