RNA interference (RNAi) is the technique employing double-stranded RNA to target the destruction of homologous messenger RNAs. It has gained wide usage in genetics. While having the potential for many practical applications, it is a reflection of a much broader spectrum of small RNA-mediated processes in the cell. The RNAi machinery was originally perceived as a defense mechanism against viruses and transposons. While this is certainly true, small RNAs have now been implicated in many other aspects of cell biology. Here we review the current knowledge of the biochemistry of RNAi in Drosophila and the involvement of small RNAs in RNAi, transposon silencing, virus defense, transgene silencing, pairing-sensitive silencing, telomere function, chromatin insulator activity, nucleolar stability, and heterochromatin formation. The discovery of the role of RNA molecules in the degradation of mRNA transcripts leading to decreased gene expression resulted in a paradigm shift in the field of molecular biology. Transgene silencing was first discovered in plant cells (Matzke et al. 1989; van der Krol et al. 1990; Napoli et al. 1990) and can occur on both the transcriptional and posttranscriptional levels, but both involve short RNA moieties in their mechanism. RNA interference (RNAi) is a type of gene silencing mechanism in which a double-stranded RNA (dsRNA) molecule directs the specific degradation of the corresponding mRNA (target RNA). The technique of RNAi was first discovered in Caenorhabditis elegans in 1994 (Guo and Kemphues 1994). Later the active component was found to be a dsRNA (Fire et al. 1998). In subsequent years, it has been found to occur in diverse eukaryotes