RNAi-mediated heterochromatin assembly in fission yeast requires the RNA-induced transcriptional silencing (RITS) complex and a putative RNA-directed RNA polymerase (Rdp1). Here we show that Rdp1 is associated with two conserved proteins, Hrr1, an RNA helicase, and Cid12, a member of the polyA polymerase family, in a complex that has RNA-directed RNA polymerase activity (RDRC, RNA-directed RNA polymerase complex). RDRC physically interacts with RITS in a manner that requires the Dicer ribonuclease (Dcr1) and the Clr4 histone methyltransferase. Moreover, both complexes are localized to the nucleus and associate with noncoding centromeric RNAs in a Dcr1-dependent manner. In cells lacking Rdp1, Hrr1, or Cid12, RITS complexes are devoid of siRNAs and fail to localize to centromeric DNA repeats to initiate heterochromatin assembly. These findings reveal a physical and functional link between Rdp1 and RITS and suggest that noncoding RNAs provide a platform for siRNA-dependent localization of RNAi complexes to specific chromosome regions.