PIWI subfamily Argonaute proteins and small RNAs bound to them (PIWI interacting RNA, piRNA) control mobilization of transposable elements (TE) in the animal germline. piRNAs are generated by distinct genomic regions termed piRNA clusters. piRNA clusters are often extensive loci enriched in damaged fragments of TEs. New TE integration into piRNA clusters causes production of TE-specific piRNAs and repression of cognate sequences. piRNAs are thought to be generated from long single-stranded precursors encoded by piRNA clusters. Special chromatin structures might be essential to distinguish these genomic loci as a source for piRNAs. In this review, we present recent findings on the structural organization of piRNA clusters and piRNA biogenesis in Drosophila and other organisms, which are important for understanding a key epigenetic mechanism that provides defense against TE expansion.