RNA interference might have evolved to minimize the deleterious impact of transposable elements and viruses on eukaryotic genomes, because mutations in genes within the RNAi pathway cause mobilization of transposons in nematodes and flies. Although the first examples of RNAi involved posttranscriptional gene silencing, recently the pathway has been shown to act at the transcriptional level. It does so by establishing a chromatin configuration on the target DNA that has many of the hallmarks of heterochromatin, thus preventing its transcription, Members of dispersed, repeated sequence families appear to have been utilized by the RNAi machinery to regulate nearby genes in yeast. The unusual genomic distribution of three repeated element families in the chicken, fruit-fly and nematode genomes prompts speculation that some of these repeats have been co-opted to control gene expression, either locally or over extended chromosomal domains.