The Piwi–piRNA pathway represents a small RNA-based mechanism responsible for the recognition and silencing of invading DNA. Biogenesis of piRNAs (21U-RNAs) is poorly understood. In Caenorhabditis elegans, the piRNA-binding Argonaute protein PRG-1 is the only known player acting downstream from precursor transcription. From a screen aimed at the isolation of piRNA-induced silencing-defective (Pid) mutations, we identified, among known Piwi pathway components, PID-1 as a novel player. PID-1 is a mostly cytoplasmic, germline-specific factor essential for 21U-RNA biogenesis, affecting an early step in the processing or transport of 21U precursor transcripts. We also show that maternal 21U-RNAs are essential to initiate silencing.