Endogenous small interfering RNAs (endo-siRNAs) regulate diverse gene expression programs in eukaryotes by either binding and cleaving mRNA targets or mediating heterochromatin formation; however, the mechanisms of endo-siRNA biogenesis, sorting, and target regulation remain poorly understood. Here we report the identification and function of a specific class of germline-generated endo-siRNAs in Caenorhabditis elegans that are 26 nt in length and contain a guanine at the first nucleotide position (i.e., 26G RNAs). 26G RNAs regulate gene expression during spermatogenesis and zygotic development, and their biogenesis requires the ERI-1 exonuclease and the RRF-3 RNA-dependent RNA polymerase (RdRP). Remarkably, we identified two nonoverlapping subclasses of 26G RNAs that sort into specific RNA-induced silencing complexes (RISCs) and differentially regulate distinct mRNA targets. Class I 26G RNAs target genes are expressed during spermatogenesis, whereas class II 26G RNAs are maternally inherited and silence gene expression during zygotic development. These findings implicate a class of endo-siRNAs in the global regulation of transcriptional programs required for fertility and development.