PIWI proteins are expressed in germ cells in a wide variety of metazoans, where they participate in the synthesis and function of a novel class of small RNAs called PIWI associated RNAs (piRNAs). One function of piRNAs is to preserve the integrity of the germline genome by silencing transposons, though they also participate in epigenetic and post-transcriptional gene regulation. In the planarian Schmidtea mediterranea, the PIWI proteins SMEDWI-1 and SMEDWI-2 are expressed in neoblasts and SMEDWI-2 is required for regeneration and homeostasis. Here, we identify a diverse population of approximately 32-nucleotide small RNAs that strongly resemble vertebrate and insect piRNAs and map to hundreds of thousands of loci in the S. mediterranea genome. The expression of these RNAs occurs predominantly in neoblasts and is not restricted to the germline. RNAi knockdown of either SMEDWI-2 or a newly identified PIWI protein, SMEDWI-3, impairs regeneration and homeostasis and decreases the levels of both piRNAs and neoblasts. Therefore, SMEDWI-2 and SMEDWI-3 are required for piRNA expression, regeneration, and neoblast function in S. mediterranea.