Small RNAs (sRNAs) are involved in gene silencing in multiple ways including through cross-kingdom transfers from parasites to their hosts. Little is known about the evolutionary mechanisms enabling eukaryotic microbes to evolve functional mimics of host small regulatory RNAs. Here, we describe the identification and functional characterization of SINE_sRNA1, a sRNA family derived from highly abundant SINE retrotransposons in the genome of the wheat powdery mildew pathogen. SINE_sRNA1 is encoded by a sequence motif that is conserved in multiple SINE families and corresponds to a functional plant miRNA mimic targeting Tae_AP1, a wheat gene encoding an aspartic protease only found in monocots. Tae_AP1 has a novel function enhancing both pattern-triggered immunity (PTI) and effector-triggered immunity (ETI) thus contributing to the cross activation of plant defenses. We conclude that SINE_sRNA1 and Tae_AP1 are functional innovations suggesting the contribution of transposons to the evolutionary arms race between a parasite and its host.