Taxon-specific small RNA loci are widespread in eukaryotic genomes, yet their role in lineage-specific adaptation, phenotypic diversification, and speciation is poorly understood. Here, we report that a speciation locus in monkeyflowers (Mimulus), YELLOW UPPER (YUP), contains an inverted repeat region that produces small interfering RNAs (siRNAs) in a phased pattern. Although the inverted repeat is derived from a partial duplication of a protein-coding gene that is not involved in flower pigmentation, one of the siRNAs targets and represses a master regulator of floral carotenoid pigmentation. YUP emerged with two protein-coding genes that control other aspects of flower coloration as a "superlocus" in a subclade of Mimulus and has contributed to subsequent phenotypic diversification and pollinator-mediated speciation in the descendant species.