Small RNA molecules regulate eukaryotic gene expression during development and in response to stresses including viral infection. Specialized ribonucleases and RNA-binding proteins govern the production and action of small regulatory RNAs. After initial processing in the nucleus by Drosha, precursor microRNAs (pre-miRNAs) are transported to the cytoplasm, where Dicer cleavage generates mature microRNAs (miRNAs) and short interfering RNAs (siRNAs). These double-stranded products assemble with Argonaute proteins such that one strand is preferentially selected and used to guide sequence-specific silencing of complementary target mRNAs by endonucleolytic cleavage or translational repression. Molecular structures of Dicer and Argonaute proteins, and of RNA-bound complexes, have offered exciting insights into the mechanisms operating at the heart of RNA-silencing pathways.