Small RNAs called PIWI -interacting RNAs (piRNAs) are essential for transposon control and fertility in animals. Primary processing is the small RNA biogenesis pathway that uses long single-stranded RNA precursors to generate millions of individual piRNAs, but the molecular mechanisms that identify a transcript as a precursor are poorly understood. Here we demonstrate that artificial tethering of the piRNA biogenesis factor, Armi, to a transcript is sufficient to direct it into primary processing in Drosophila ovaries and in an ovarian cell culture model. In the fly ovarian somatic follicle cells, the transcript becomes cleaved in a stepwise manner, with a 5'→3' directionality, liberating U1-containing ~24 nt piRNAs that are loaded into Piwi. Although uridines are preferred for generation of piRNA 5' ends, processing takes place even in their absence, albeit at a lower efficiency. We show that recombinant Armi has 5'→3' helicase activity, and mutations that abolish this activity also reduce piRNA processing in vivo. Another somatic piRNA pathway factor Yb, an interactor of Armi, is also able to trigger piRNA biogenesis when tethered to a transcript. Tethering-mediated primary piRNA biogenesis is also functional in the fly ovarian germline and loads all the three PIWI proteins present in this environment. Our study finds a broad correlation between piRNA processing and localization of the tethered factors to the cytoplasmic perinuclear ribonucleoprotein granules called germline nuage or somatic Yb bodies. We conclude that transcripts bound by Armi and Yb are identified as piRNA precursors, resulting in localization to cytoplasmic processing granules and their subsequent engagement by the resident piRNA biogenesis machinery.