RNAi, a gene-silencing pathway triggered by double-stranded RNA, is conserved in diverse eukaryotic species but has been lost in the model budding yeast, Saccharomyces cerevisiae. We report that RNAi is present in other budding-yeast species, including Saccharomyces castellii and Candida albicans. These species use noncanonical Dicer proteins to generate siRNAs, which mostly correspond to transposable elements and Y´ subtelomeric repeats. In S. castellii, RNAi mutants are viable but have excess Y´ mRNA levels. In S. cerevisiae, introducing Dicer and Argonaute of S. castellii restores RNAi, and the reconstituted pathway silences endogenous retrotransposons. These results identify a novel class of Dicer proteins, bring the tool of RNAi to the study of budding yeasts, and bring the tools of budding yeast to the study of RNAi. Overall design: Employ high-throughput sequencing of endogenous small RNAs from the budding yeasts Saccharomyces castellii, Kluyveromyces polysporus, Candida albicans, Saccharomyces cerevisiae, and Saccharomyces bayanus.