RNA interference (RNAi) is a conserved mechanism of small RNA-mediated genome regulation commonly involved in suppression of transposable elements (TEs) through both post-transcriptional silencing, and transcriptional repression via heterochromatin assembly. The fission yeast Schizosaccharomyces pombe has been extensively utilised as a model for studying RNAi pathways. However, this species is somewhat atypical in that TEs are not major targets of RNAi, and instead small RNAs correspond primarily to non-coding pericentromeric repeat sequences, reflecting a specialised role for the pathway in promoting heterochromatin assembly in these regions. In contrast, in the related fission yeast Schizosaccharomyces japonicus, sequenced small RNAs correspond primarily to TEs. This suggests there may be fundamental differences in the operation of RNAi pathways in these two related species. To investigate these differences, we probed RNAi function in S. japonicus. Unexpectedly, and in contrast to S. pombe, we found that RNAi is essential in this species. Moreover, viability of RNAi mutants can be rescued by mutations implicated in enhancing RNAi-independent heterochromatin propagation. These rescued strains retain heterochromatic marks on TE sequences, but exhibit derepression of TEs at the post-transcriptional level. Our findings indicate that S. japonicus retains the ancestral role of RNAi in facilitating suppression of TEs via both post-transcriptional silencing and heterochromatin assembly, with specifically the heterochromatin pathway being essential for viability, likely due to a function in genome maintenance. The specialised role of RNAi in heterochromatin assembly in S. pombe appears to be a derived state that emerged after the divergence of S. japonicus.