The control of transposable element (TE) activity in germ cells provides genome integrity over generations. A distinct small RNA–mediated pathway utilizing Piwi-interacting RNAs (piRNAs) suppresses TE expression in gonads of metazoans. In the fly, primary piRNAs derive from so-called piRNA clusters, which are enriched in damaged repeated sequences. These piRNAs launch a cycle of TE and piRNA cluster transcript cleavages resulting in the amplification of piRNA and TE silencing. Using genome-wide comparison of TE insertions and ovarian small RNA libraries from two Drosophila strains, we found that individual TEs inserted into euchromatic loci form novel dual-stranded piRNA clusters. Formation of the piRNA-generating loci by active individual TEs provides a more potent silencing response to the TE expansion. Like all piRNA clusters, individual TEs are also capable of triggering the production of endogenous small interfering (endo-si) RNAs. Small RNA production by individual TEs spreads into the flanking genomic regions including coding cellular genes. We show that formation of TE-associated small RNA clusters can down-regulate expression of nearby genes in ovaries. Integration of TEs into the 3′ untranslated region of actively transcribed genes induces piRNA production towards the 3′-end of transcripts, causing the appearance of genic piRNA clusters, a phenomenon that has been reported in different organisms. These data suggest a significant role of TE-associated small RNAs in the evolution of regulatory networks in the germline.

PIWI-interacting RNAs (piRNAs) provide defence against transposable element (TE) expansion in the germ line of metazoans. piRNAs are processed from the transcripts encoded by specialized heterochromatic clusters enriched in damaged copies of transposons. How these regions are recognized as a source of piRNAs is still elusive. The aim of this study is to determine how transgenes that contain a fragment of the Long Interspersed Nuclear Elements (LINE)-like I transposon lead to an acquired TE resistance in Drosophila. We show that such transgenes, being inserted in unique euchromatic regions that normally do not produce small RNAs, become de novo bidirectional piRNA clusters that silence I-element activity in the germ line. Strikingly, small RNAs of both polarities are generated from the entire transgene and flanking genomic sequences—not only from the transposon fragment. Chromatin immunoprecipitation analysis shows that in ovaries, the trimethylated histone 3 lysine 9 (H3K9me3) mark associates with transgenes producing piRNAs. We show that transgene-derived hsp70 piRNAs stimulate in trans cleavage of cognate endogenous transcripts with subsequent processing of the non-homologous parts of these transcripts into piRNAs.