Drosophila melanogaster has two Dicer proteins with specialized functions. Dicer-1 liberates miRNA-miRNA* duplexes from precursor miRNAs (pre-miRNAs), whereas Dicer-2 processes long double-stranded RNAs into small interfering RNA duplexes. It was recently demonstrated that Dicer-2 is rendered highly specific for long double-stranded RNA substrates by inorganic phosphate and a partner protein R2D2. However, it remains unclear how Dicer-1 exclusively recognize pre-miRNAs. Here we show that fly Dicer-1 recognizes the single-stranded terminal loop structure of pre-miRNAs through its N-terminal helicase domain, checks the loop size and measures the distance between the 3' overhang and the terminal loop. This unique mechanism allows fly Dicer-1 to strictly inspect the authenticity of pre-miRNA structures.