The 'nuclear side' of RNA interference (RNAi) is increasingly recognized as an integral part of RNA-mediated gene silencing networks. Current data are consistent with the idea that epigenetic changes, such as DNA (cytosine-5) methylation and histone modifications, can be targeted to identical DNA sequences by short RNAs derived via Dicer cleavage of double-stranded RNA (dsRNA). To determine the relationships among RNA signals, DNA methylation and chromatin structure, we are carrying out a genetic analysis of RNA-mediated transcriptional gene silencing (TGS) in Arabidopsis. Results obtained so far indicate that in response to RNA signals, different site-specific DNA methyltransferases (DMTases) cooperate with each other and eventually with histone-modifying enzymes to establish and maintain a transcriptionally inactive state at a homologous target promoter. Processing of dsRNA in Arabidopsis occurs in the nucleus and in the cytoplasm, where distinct Dicer-like (DCL) activities are thought to generate functionally distinct classes of short RNAs. RNA silencing pathways thus operate throughout the cell to defend against invasive nucleic acids and to regulate genome structure and function.