RNA interference (RNAi) is a conserved silencing mechanism that has widespread roles in RNA degradation, translational repression, and the epigenetic control of chromatin structure [1]. In fission yeast, heterochromatin assembly requires RNAi machinery and is initiated by small interference RNAs (siRNAs) derived from heterochromatic regions and by the RNA-induced transcriptional silencing (RITS) complex [2-7]. Although recent studies have been successful in uncovering the functions of effector complexes in the RNAi pathway [4, 5, 8-10], exactly how heterochromatic siRNAs are processed and function in assembling heterochromatin remains unclear. In this study we focused on a conserved ribonuclease, Eri1, which was originally identified as a negative regulator of RNAi in C. elegans [11], and show the importance of the Eri1 protein in RNAi-mediated heterochromatin assembly in fission yeast. Eri1 specifically degrades double-stranded siRNAs through two functional domains and represses the accumulation of cellular siRNAs in vivo. Deletion of eri1(+) causes an increase in siRNAs associated with the RITS complex and enhances heterochromatic silencing, which is accompanied by increased levels of histone H3-K9 methylation and the Swi6 protein. Our findings suggest that the fission yeast Eri1 controls the accumulation of heterochromatic siRNAs and negatively regulates the RNAi-mediated heterochromatin assembly.