RNA interference (RNAi) is an ancient process by which non-coding RNAs regulate gene expression in a sequence-specific manner. The core components of RNAi are small regulatory RNAs, approximately 21–30 nucleotides in length, including small interfering RNAs (siRNAs) and microRNAs (miRNAs). The past two decades have seen considerable progress in our understanding of the molecular mechanisms underlying the biogenesis of siRNAs and miRNAs. Recent advances have also revealed the crucial regulatory roles played by small RNAs in such diverse processes as development, homeostasis, innate immunity, and oncogenesis. Accumulating evidence indicates that RNAi initially evolved as a host defense mechanism against viruses and transposons. The ability of the host small RNA biogenesis machinery to recognize viral double-stranded RNA replication intermediates and transposon transcripts is critical to this process, as is small RNA-guided targeting of RNAs via complementary base pairing. Collectively, these properties confer unparalleled specificity and precision to RNAi-mediated gene silencing as an effective antiviral mechanism.