Double-stranded RNA (dsRNA) induces post-transcriptional gene silencing (RNAi) in various organisms. This study shows that dsRNA containing promoter sequences can trigger transcriptional gene silencing and de novo methylation of the target promoter in plants. Similar to RNAi, this promoter dsRNA is partially cleaved into small RNAs (~23 nucleotides). Both transcriptional and post-transcriptional gene silencing can be initiated by dsRNAs entering the same degradation pathway. The results suggest that dsRNA may direct DNA methylation. Constructs designed to produce dsRNA in various ways were tested for their ability to induce gene silencing in tobacco and Arabidopsis. RNA hairpins transcribed from inverted DNA repeats were the most effective trans-acting silencing signals. This strategy could be useful for transcriptionally downregulating genes in various plants. RNA interference (RNAi) is a post-transcriptional gene silencing process in which double-stranded RNA induces the degradation of homologous RNA sequences. RNAi was first discovered in Caenorhabditis elegans and is similar to PTGS in plants and quelling in Neurospora. The relationship between these processes has been confirmed by analyzing mutants, revealing that they require some of the same gene products in different organisms. RNAi and other PTGS phenomena require sequence homology in protein-coding or transcribed regions. In plants, transcriptional gene silencing (TGS) resulting from sequence homology in promoter regions has been observed and correlated with increased promoter methylation. Methylation associated with PTGS in plants is acquired in transcribed or coding regions, where its role is still unclear. Because the DNA methylation changes seen in both types of silencing are confined largely to regions of sequence homology between interacting genes, sequence-specific methylation signals consisting of either DNA–DNA or RNA–DNA associations are believed to be involved. Precedents for DNA–DNA pairing as a trigger for DNA modifications are provided by the RIP and MIP phenomena in the filamentous fungi Neurospora crassa and Ascobolus immersus, respectively. While RIP produces mutations in duplicated sequences, MIP is a purely epigenetic process involving pairing-dependent silencing and methylation of duplications longer than ~400 bp. The pairwise modification of simple sequence duplications in these fungi contrasts to the situation in plants, where most of the evidence for somatic DNA pairing that modifies gene expression has been obtained with complex, repetitive loci. DNA pairing might nevertheless provide a signal for de novo methylation in plants considering the recent finding of an Arabidopsis methyltransferase required for MIP in Ascobolus. RNA-directed DNA methylation (RdDM) was first discovered with a viroid system in plants. Viroids are plant pathogens consisting solely of non-coding, highly base-paired RNAs that are replicated in the nucleus by the host RNA polymerase II. ViDouble-stranded RNA (dsRNA) induces post-transcriptional gene silencing (RNAi) in various organisms. This study shows that dsRNA containing promoter sequences can trigger transcriptional gene silencing and de novo methylation of the target promoter in plants. Similar to RNAi, this promoter dsRNA is partially cleaved into small RNAs (~23 nucleotides). Both transcriptional and post-transcriptional gene silencing can be initiated by dsRNAs entering the same degradation pathway. The results suggest that dsRNA may direct DNA methylation. Constructs designed to produce dsRNA in various ways were tested for their ability to induce gene silencing in tobacco and Arabidopsis. RNA hairpins transcribed from inverted DNA repeats were the most effective trans-acting silencing signals. This strategy could be useful for transcriptionally downregulating genes in various plants. RNA interference (RNAi) is a post-transcriptional gene silencing process in which double-stranded RNA induces the degradation of homologous RNA sequences. RNAi was first discovered in Caenorhabditis elegans and is similar to PTGS in plants and quelling in Neurospora. The relationship between these processes has been confirmed by analyzing mutants, revealing that they require some of the same gene products in different organisms. RNAi and other PTGS phenomena require sequence homology in protein-coding or transcribed regions. In plants, transcriptional gene silencing (TGS) resulting from sequence homology in promoter regions has been observed and correlated with increased promoter methylation. Methylation associated with PTGS in plants is acquired in transcribed or coding regions, where its role is still unclear. Because the DNA methylation changes seen in both types of silencing are confined largely to regions of sequence homology between interacting genes, sequence-specific methylation signals consisting of either DNA–DNA or RNA–DNA associations are believed to be involved. Precedents for DNA–DNA pairing as a trigger for DNA modifications are provided by the RIP and MIP phenomena in the filamentous fungi Neurospora crassa and Ascobolus immersus, respectively. While RIP produces mutations in duplicated sequences, MIP is a purely epigenetic process involving pairing-dependent silencing and methylation of duplications longer than ~400 bp. The pairwise modification of simple sequence duplications in these fungi contrasts to the situation in plants, where most of the evidence for somatic DNA pairing that modifies gene expression has been obtained with complex, repetitive loci. DNA pairing might nevertheless provide a signal for de novo methylation in plants considering the recent finding of an Arabidopsis methyltransferase required for MIP in Ascobolus. RNA-directed DNA methylation (RdDM) was first discovered with a viroid system in plants. Viroids are plant pathogens consisting solely of non-coding, highly base-paired RNAs that are replicated in the nucleus by the host RNA polymerase II. Vi