An ideal model system to study antiviral immunity and host-pathogen co-evolution would combine a genetically tractable small animal with a virus capable of naturally infecting the host organism. The use of C. elegans as a model to define host-viral interactions has been limited by the lack of viruses known to infect nematodes. From wild isolates of C. elegans and C. briggsae with unusual morphological phenotypes in intestinal cells, we identified two novel RNA viruses distantly related to known nodaviruses, one infecting specifically C. elegans (Orsay virus), the other C. briggsae (Santeuil virus). Bleaching of embryos cured infected cultures demonstrating that the viruses are neither stably integrated in the host genome nor transmitted vertically. 0.2 μm filtrates of the infected cultures could infect cured animals. Infected animals continuously maintained viral infection for 6 mo (~50 generations), demonstrating that natural cycles of horizontal virus transmission were faithfully recapitulated in laboratory culture. In addition to infecting the natural C. elegans isolate, Orsay virus readily infected laboratory C. elegans mutants defective in RNAi and yielded higher levels of viral RNA and infection symptoms as compared to infection of the corresponding wild-type N2 strain. These results demonstrated a clear role for RNAi in the defense against this virus. Furthermore, different wild C. elegans isolates displayed differential susceptibility to infection by Orsay virus, thereby affording genetic approaches to defining antiviral loci. This discovery establishes a bona fide viral infection system to explore the natural ecology of nematodes, host-pathogen co-evolution, the evolution of small RNA responses, and innate antiviral mechanisms.