In plants and fungi, small RNAs silence gene expression in the nucleus by establishing repressive chromatin states. The role of endogenous small RNAs in metazoan nuclei is largely unknown. Here we show that endogenous small interfering RNAs (endo-siRNAs) direct Histone H3 Lysine 9 methylation (H3K9me) in Caenorhabditis elegans. In addition, we report the identification and characterization of nuclear RNAi defective (nrde)-1 and nrde-4. Endo-siRNA-driven H3K9me requires the nuclear RNAi pathway including the Argonaute (Ago) NRDE-3, the conserved nuclear RNAi factor NRDE-2, as well as NRDE-1 and NRDE-4. Small RNAs direct NRDE-1 to associate with the pre-mRNA and chromatin of genes, which have been targeted by RNAi. NRDE-3 and NRDE-2 are required for the association of NRDE-1 with pre-mRNA and chromatin. NRDE-4 is required for NRDE-1/chromatin association, but not NRDE-1/pre-mRNA association. These data establish that NRDE-1 is a novel pre-mRNA and chromatin-associating factor that links small RNAs to H3K9 methylation. In addition, these results demonstrate that endo-siRNAs direct chromatin modifications via the Nrde pathway in C. elegans.