Small RNAs, such as microRNAs and small interfering RNAs, act through Argonaute (Ago) proteins as a part of RNA-induced silencing complexes (RISCs). To make RISCs, Ago proteins bind and subsequently unwind small RNA duplexes, finally leaving one strand stably incorporated. Here we identified the N domain of human AGO2 as the initiator of duplex unwinding during RISC assembly. We discovered that a functional N domain is strictly required for small RNA duplex unwinding but not for precedent duplex loading or subsequent target cleavage. We postulate that RISC assembly is tripartite, comprising (i) RISC loading, whereby Ago undergoes conformational opening and loads a small RNA duplex, forming pre-RISC; (ii) wedging, whereby the end of the duplex is pried open through active wedging by the N domain, in preparation for unwinding; and (iii) unwinding, whereby the passenger strand is removed through slicer-dependent or slicer-independent unwinding, forming mature RISC.