In C. elegans, DCR-1 is required for the maturation of both short interfering RNAs (siRNAs) and microRNAs (miRNAs), which are subsequently loaded into different Argonaute proteins to mediate silencing via distinct mechanisms. We used in vivo analyses to show that precursors of small RNAs contain structural features that direct the small RNAs into the RNA interference (RNAi) pathway or the miRNA-processing pathway. Nucleotide changes in the pre-let-7 miRNA precursor that make its stem fully complementary cause the resulting small RNA to be recognized as siRNA and induce binding to RDE-1, which leads to RNAi. Mismatches of 1 to 3 nucleotides at various positions in the stem of the precursor restore direction into the miRNA pathway, as the largest portion of such small RNA variants is associated with ALG-1. The Argonaute proteins to which the small RNAs are bound determine the silencing mode, and no functional overlap between RDE-1 and ALG-1 was detected.