Double-stranded RNA (dsRNA) can enter different pathways in mammalian cells, including sequence-specific RNA interference (RNAi), sequence-independent interferon (IFN) response and editing by adenosine deaminases. To study the routing of dsRNA to these pathways in vivo, we used transgenic mice ubiquitously expressing from a strong promoter, an mRNA with a long hairpin in its 3'-UTR. The expressed dsRNA neither caused any developmental defects nor activated the IFN response, which was inducible only at high expression levels in cultured cells. The dsRNA was poorly processed into siRNAs in somatic cells, whereas, robust RNAi effects were found in oocytes, suggesting that somatic cells lack some factor(s) facilitating siRNA biogenesis. Expressed dsRNA did not cause transcriptional silencing in trans. Analysis of RNA editing revealed that a small fraction of long dsRNA is edited. RNA editing neither prevented the cytoplasmic localization nor processing into siRNAs. Thus, a long dsRNA structure is well tolerated in mammalian cells and is mainly causing a robust RNAi response in oocytes.