Small RNAs (sRNAs) play important roles in plants under stress conditions. However, limited research has been performed on the sRNAs involved in plant wound responses. In the present study, a novel wounding-induced sRNA, sRNA8105, was identified in sweet potato (Ipomoea batatas cv. Tainung 57) using microarray analysis. It was found that expression of sRNA8105 increased after mechanical wounding. Furthermore, Dicer-like 1 (DCL1) is required for the sRNA8105 precursor (pre-sRNA8105) to generate 22 and 24 nt mature sRNA8105. sRNA8105 targeted the first intron of IbMYB1 (MYB domain protein 1) before RNA splicing, and mediated RNA cleavage and DNA methylation of IbMYB1. The interaction between sRNA8105 and IbMYB1 was confirmed by cleavage site mapping, agro-infiltration analyses, and use of a transgenic sweet potato over-expressing pre-sRNA8105 gene. Induction of IbMYB1-siRNA was observed in the wild-type upon wounding and in transgenic sweet potato over-expressing pre-sRNA8105 gene without wounding, resulting in decreased expression of the whole IbMYB1 gene family, i.e. IbMYB1 and the IbMYB2 genes, and thus directing metabolic flux toward biosynthesis of lignin in the phenylpropanoid pathway. In conclusion, sRNA8105 induced by wounding binds to the first intron of IbMYB1 RNA to methylate IbMYB1, cleave IbMYB1 RNA, and trigger production of secondary siRNAs, further repressing the expression of the IbMYB1 family genes and regulating the phenylpropanoid pathway.