AbstractClustered regularly interspaced short palindromic repeats (CRISPR) together with associated sequences (cas) form the CRISPR‐Cas system, which provides adaptive immunity against viruses and plasmids in bacteria and archaea. Immunity is built through acquisition of short stretches of invasive nucleic acids into CRISPR loci as ‘spacers'. These immune markers are transcribed and processed into small noncoding interfering CRISPR RNAs (crRNAs) that guide Cas proteins toward target nucleic acids for specific cleavage of homologous sequences. Mechanistically, CRISPR‐Cas systems function in three distinct stages, namely: (1) adaptation, where new spacers are acquired from invasive elements for immunization; (2) crRNA biogenesis, where CRISPR loci are transcribed and processed into small interfering crRNAs; and (3) interference, where crRNAs guide the Cas machinery to specifically cleave homologous invasive nucleic acids. A number of studies have shown that CRISPR‐mediated immunity can readily increase the breadth and depth of virus resistance in bacteria and archaea. CRISPR interference can also target plasmid sequences and provide a barrier against the uptake of undesirable mobile genetic elements. These inheritable hypervariable loci provide phylogenetic information that can be insightful for typing purposes, epidemiological studies, and ecological surveys of natural habitats and environmental samples. More recently, the ability to reprogram CRISPR‐directed endonuclease activity using customizable small noncoding interfering RNAs has set the stage for novel genome editing and engineering avenues. This review highlights recent studies that revealed the molecular basis of CRISPR‐mediated immunity, and discusses applications of crRNA‐guided interference. WIREs RNA 2013, 4:267–278. doi: 10.1002/wrna.1159This article is categorized under: RNA Turnover and Surveillance > Turnover/Surveillance Mechanisms Regulatory RNAs/RNAi/Riboswitches > Biogenesis of Effector Small RNAs Regulatory RNAs/RNAi/Riboswitches > RNAi: Mechanisms of Action