RNA interference (RNAi) is a mechanism by which double-stranded RNAs (dsRNAs) suppress specific transcripts in a sequence-dependent manner. dsRNAs are processed by Dicer to 21–24-nucleotide small interfering RNAs (siRNAs) and then incorporated into the argonaute (Ago) proteins^,,,. Gene regulation by endogenous siRNAs has been observed only in organisms possessing RNA-dependent RNA polymerase (RdRP)^,,,,,. In mammals, where no RdRP activity has been found, biogenesis and function of endogenous siRNAs remain largely unknown. Here we show, using mouse oocytes, that endogenous siRNAs are derived from naturally occurring dsRNAs and have roles in the regulation of gene expression. By means of deep sequencing, we identify a large number of both ∼25–27-nucleotide Piwi-interacting RNAs (piRNAs) and ∼21-nucleotide siRNAs corresponding to messenger RNAs or retrotransposons in growing oocytes. piRNAs are bound to Mili and have a role in the regulation of retrotransposons. siRNAs are exclusively mapped to retrotransposons or other genomic regions that produce transcripts capable of forming dsRNA structures. Inverted repeat structures, bidirectional transcription and antisense transcripts from various loci are sources of the dsRNAs. Some precursor transcripts of siRNAs are derived from expressed pseudogenes, indicating that one role of pseudogenes is to adjust the level of the founding source mRNA through RNAi. Loss of Dicer or Ago2 results in decreased levels of siRNAs and increased levels of retrotransposon and protein-coding transcripts complementary to the siRNAs. Thus, the RNAi pathway regulates both protein-coding transcripts and retrotransposons in mouse oocytes. Our results reveal a role for endogenous siRNAs in mammalian oocytes and show that organisms lacking RdRP activity can produce functional endogenous siRNAs from naturally occurring dsRNAs.