Mutations that enhance the response to double-stranded RNA (dsRNA) have revealed components of the RNA interference (RNAi) pathway or related small RNA pathways. To explore these small RNA pathways, we screened for Caenorhabditis elegans mutants displaying an enhanced response to exogenous dsRNAs. Here we describe the isolation of mutations in two adjacent, divergently transcribed open reading frames (eri-6 and eri-7) that fail to complement. eri-6 and eri-7 produce separate pre-messenger RNAs (pre-mRNAs) that are trans-spliced to form a functional mRNA, eri-6/7. Trans-splicing of eri-6/7 is mediated by a direct repeat that flanks the eri-6 gene. Adenosine to inosine editing within untranslated regions of eri-6 and eri-7 pre-mRNAs reveals a double-stranded pre-mRNA intermediate, forming in the nucleus before splicing occurs. The ERI-6/7 protein is a superfamily I helicase that both negatively regulates the exogenous RNAi pathway and functions in an endogenous RNAi pathway.