RNA interference (RNAi) can be an effective antiviral agent; however, overexpression of RNAi can be toxic through competition with the endogenous microRNA (miRNA) machinery. We used rational design to identify highly potent RNAi that is effective at nontoxic doses. A statistical analysis was conducted to pinpoint thermodynamic characteristics correlated with activity. Sequences were selected that conformed to a consensus internal stability profile (ISP) associated with active RNAi, and RNAi triggers were expressed in the context of an endogenous miRNA. These approaches yielded highly active hepatitis B virus (HBV) RNAi. A statistical analysis found a correlation between activity and nucleation by binding within the seed sequence to accessible regions in the target RNA. Guide strands were selected for favorable strand biasing, but increased strand biasing did not correlate with potency, suggesting a threshold effect. Exogenous short hairpin RNAs (shRNAs), but not miRNAs were previously reported to compete with miRNAs for the miRNA/RNAi machinery. In contrast, we show that exogenous Polymerase III- but not Polymerase II-driven miRNAs compete with exogenous miRNAs, at multiple steps in the miRNA pathway. Exogenous miRNAs also compete with endogenous miR-21. Thus, competition with endogenous miRNAs should be monitored even when using miRNA-based therapeutics. However, potent silencing was achieved at doses where competition was not observed.