Significance The “centromere paradox” refers to rapidly evolving and highly diverse centromere DNA sequences even in closely related eukaryotes. However, factors contributing to this rapid divergence are largely unknown. Here, we identified large regional, LTR retrotransposon-rich centromeres in a group of human fungal pathogens belonging to the Cryptococcus species complex. We provide evidence that loss-of-functional RNAi machinery and possibly cytosine DNA methylation trigger instability of the genome by activation of centromeric retrotransposons presumably suppressed by RNAi. We propose that RNAi, together with cytosine DNA methylation, serves as a critical determinant that maintains repetitive transposon-rich centromere structures. This study explores the direct link between RNAi and centromere structure evolution.