Nuclear RNA interference provides a unique approach to the study of RNA-mediated transgenerational epigenetic inheritance. A paradox in the field is that expression of target loci is necessary for the initiation and maintenance of their silencing. How expression and repression are coordinated during animal development is poorly understood. To resolve this gap, we took imaging, deep-sequencing and genetic approaches towards delineating the developmental regulation and subcellular localization of RNA transcripts of two representative endogenous targets, the LTR retrotransposons Cer3 and Cer8. By examining wild-type worms and a collection of mutant strains, we found that the expression and silencing cycle of Cer3 and Cer8 is coupled with embryonic and germline development. Strikingly, endogenous targets exhibit a hallmark of nuclear enrichment of their RNA transcripts. In addition, germline and somatic repressions of Cer3 have different genetic requirements for three heterochromatin enzymes, MET-2, SET-25 and SET-32, in conjunction with the nuclear Argonaute protein HRDE-1. These results provide the first comprehensive cellular and developmental characterization of nuclear RNAi activities throughout the animal reproductive cycle.