Small RNA molecules of about 20-30 nucleotides have emerged as powerful regulators of gene expression and genome stability. Studies in fission yeast and multicellular organisms suggest that effector complexes, directed by small RNAs, target nascent chromatin-bound non-coding RNAs and recruit chromatin-modifying complexes. Interactions between small RNAs and nascent non-coding transcripts thus reveal a new mechanism for targeting chromatin-modifying complexes to specific chromosome regions and suggest possibilities for how the resultant chromatin states may be inherited during the process of chromosome duplication.