The reovirus σNS RNA-binding protein is required for formation of intracellular compartments during viral infection that support viral genome replication and capsid assembly. Despite its functional importance, a mechanistic understanding of σNS is lacking. We conducted structural and biochemical analyses of an R6A mutant of σNS that forms dimers instead of the higher-order oligomers formed by wildtype (WT) σNS. The crystal structure of selenomethionine-substituted σNS-R6A reveals that the mutant protein forms a stable antiparallel dimer, with each subunit having a well-folded central core and a projecting N-terminal arm. The dimers interact with each other by inserting the N-terminal arms into a hydrophobic pocket of the neighboring dimers on either side to form a helical assembly that resembles filaments of WT σNS in complex with RNA observed using cryo-EM. The interior of the crystallographic helical assembly is positively charged and of appropriate diameter to bind RNA. The helical assembly is disrupted by bile acids, which bind to the same hydrophobic pocket as the N-terminal arm, as demonstrated in the crystal structure of σNS-R6A in complex with bile acid, suggesting that the N-terminal arm functions in conferring context-dependent oligomeric states of σNS. This idea is supported by the structure of σNS lacking the N-terminal arm. We discovered that σNS displays RNA helix destabilizing and annealing activities, likely essential for presenting mRNA to the viral RNA-dependent RNA polymerase for genome replication. The RNA chaperone activity is reduced by bile acids and abolished by N-terminal arm deletion, suggesting that the activity requires formation of σNS oligomers. Our studies provide structural and mechanistic insights into the function of σNS in reovirus replication.