Dictyostelium intermediate repeat sequence 1 (DIRS-1) is the founding member of a poorly characterized class of retrotransposable elements that contain inverse long terminal repeats and tyrosine recombinase instead of DDE-type integrase enzymes. In Dictyostelium discoideum, DIRS-1 forms clusters that adopt the function of centromeres, rendering tight retrotransposition control critical to maintaining chromosome integrity. We report that in deletion strains of the RNA-dependent RNA polymerase RrpC, full-length and shorter DIRS-1 messenger RNAs are strongly enriched. Shorter versions of a hitherto unknown long non-coding RNA in DIRS-1 antisense orientation are also enriched in rrpC- strains. Concurrent with the accumulation of long transcripts, the vast majority of small (21 mer) DIRS-1 RNAs vanish in rrpC- strains. RNASeq reveals an asymmetric distribution of the DIRS-1 small RNAs, both along DIRS-1 and with respect to sense and antisense orientation. We show that RrpC is required for post-transcriptional DIRS-1 silencing and also for spreading of RNA silencing signals. Finally, DIRS-1 mis-regulation in the absence of RrpC leads to retrotransposon mobilization. In summary, our data reveal RrpC as a key player in the silencing of centromeric retrotransposon DIRS-1. RrpC acts at the post-transcriptional level and is involved in spreading of RNA silencing signals, both in the 5' and 3' directions.