Small RNAs are a group of regulatory RNA molecules that control gene expression at transcriptional or post-transcriptional levels among eukaryotes. The silkworm, Bombyx mori L., genome harbors abundant repetitive sequences derived from families of retrotransposons and transposons, which together constitute almost half of the genome space and provide ample resource for biogenesis of the three major small RNA families. We systematically discovered transposable-element (TE)-associated small RNAs in B. mori genome based on a deep RNA-sequencing strategy and the effort yielded 182, 788 and 4,990 TE-associated small RNAs in the miRNA, siRNA and piRNA species, respectively. Our analysis suggested that the three small RNA species preferentially associate with different TEs to create sequence and functional diversity, and we also show evidence that a Bombyx non-LTR retrotransposon, bm1645, alone contributes to the generation of TE-associated small RNAs in a very significant way. The fact that bm1645-associated small RNAs partially overlap with each other implies a possibility that this element may be modulated by different mechanisms to generate different products with diverse functions. Taken together, these discoveries expand the small RNA pool in B. mori genome and lead to new knowledge on the diversity and functional significance of TE-associated small RNAs.