The RNA interference (RNAi) pathway is initiated by processing long double-stranded RNA into small interfering RNA (siRNA). The siRNA-generating enzyme was purified from Drosophila S2 cells and consists of two stoichiometric subunits: Dicer-2 (DCR-2) and a previously unknown protein that we named R2D2. R2D2 is homologous to the Caenorhabditis elegans RNAi protein RDE-4. Association with R2D2 does not affect the enzymatic activity of DCR-2. Rather, the DCR-2/R2D2 complex, but not DCR-2 alone, binds to siRNA and enhances sequence-specific messenger RNA degradation mediated by the RNA-initiated silencing complex (RISC). These results indicate that R2D2 bridges the initiation and effector steps of the Drosophila RNAi pathway by facilitating siRNA passage from Dicer to RISC.