Programmed genome rearrangements drive functional gene assembly in ciliates during the development of the somatic macronucleus. The elimination of germline sequences is directed by noncoding RNAs and is initiated by DNA double-strand breaks, but the enzymes responsible for DNA cleavage have not been identified. We show here that PiggyMac (Pgm), a domesticated piggyBac transposase, is required for these rearrangements in Paramecium tetraurelia. A GFP-Pgm fusion localizes in developing macronuclei, where rearrangements take place, and RNAi-mediated silencing of PGM abolishes DNA cleavage. This is the first in vivo evidence suggesting an essential endonucleolytic function of a domesticated piggyBac transposase.