Small RNAs recognize, bind, and regulate other complementary cellular RNAs. The introduction of small RNAs to eukaryotic cells frequently results in unintended silencing of related, but not identical, RNAs: a process termed off-target gene silencing. Off-target gene silencing is one of the major concerns during the application of small RNA-based technologies for gene discovery and the treatment of human disease. Off-target gene silencing is commonly thought to be due to inherent biochemical limitations of the RNAi machinery. Here we show that following the introduction of exogenous sources of double-stranded RNA, the nuclear RNAi pathway, but not its cytoplasmic counterparts, is the primary source of off-target silencing in Caenorhabditis elegans. In addition, we show that during the normal course of growth and development the nuclear RNAi pathway regulates repetitive gene families. Therefore, we speculate that RNAi off-target effects might not be "mistakes" but rather an intentional and genetically programmed aspect of small RNA-mediated gene silencing, which might allow small RNAs to silence rapidly evolving parasitic nucleic acids. Finally, reducing off-target effects by manipulating the nuclear RNAi pathway in vivo might improve the efficacy of small RNA-based technologies.