Small RNAs, including small interfering RNAs (siRNAs), microRNAs (miRNAs) and Piwi-associated interfering RNAs (piRNAs), are powerful gene expression regulators. This RNA-mediated regulation results in sequence-specific inhibition of gene expression by translational repression and/or mRNA degradation. siRNAs and miRNAs are generated by RNase III enzymes and subsequently loaded into Argonaute protein, a key component of the RNA induced silencing complex (RISC), to form the core of the RNA silencing machinery. RNA silencing acts as an ancient cell defense system against molecular parasites, such as transgenes, viruses and transposons. RNA silencing also plays an important role in the control of development. In plants, RNA silencing serves as a potent antiviral defense system. In response, many viruses have developed strategies to suppress RNA silencing. The striking sequence diversity among viral suppressors suggests that different viral suppressors could target different components of the RNA silencing machinery at different steps in different suppressing modes. Significant progresses have been made in this field for the past 5 years on the basis of structural information derived from RNase III family proteins, Dicer fragments and homologs, Argonaute homologs and viral suppressors. In this paper, we will review the current progress on the understanding of molecular mechanisms of RNA silencing; highlight the structural principles determining the protein-RNA recognition events along the RNA silencing pathways and the suppression mechanisms displayed by viral suppressors.