CRISPR interference confers adaptive, sequence-based immunity against viruses and plasmids and is specified by CRISPR RNAs (crRNAs) that are transcribed and processed from spacer-repeat units. Pre-crRNA processing is essential for CRISPR interference in all systems studied thus far. Here, our studies of crRNA biogenesis and CRISPR interference in naturally competent Neisseria spp. reveal a unique crRNA maturation pathway in which crRNAs are transcribed from promoters that are embedded within each repeat, yielding crRNA 5’ ends formed by transcription and not by processing. Although crRNA 3’ end formation involves RNase III and trans-encoded tracrRNA, as in other Type II CRISPR systems, this processing is dispensable for interference. The meningococcal pathway is the most streamlined CRISPR/cas system characterized to date. Endogenous CRISPR spacers limit natural transformation, which is the primary source of genetic variation that contributes to immune evasion, antibiotic resistance, and virulence in the human pathogen N. meningitidis.