We examined the role of ATP in the RNA interference (RNAi) pathway. Our data reveal two ATP-dependent steps and suggest that the RNAi reaction comprises at least four sequential steps: ATP-dependent processing of double-stranded RNA into small interfering RNAs (siRNAs), incorporation of siRNAs into an inactive approximately 360 kDa protein/RNA complex, ATP-dependent unwinding of the siRNA duplex to generate an active complex, and ATP-independent recognition and cleavage of the RNA target. Furthermore, ATP is used to maintain 5' phosphates on siRNAs. A 5' phosphate on the target-complementary strand of the siRNA duplex is required for siRNA function, suggesting that cells check the authenticity of siRNAs and license only bona fide siRNAs to direct target RNA destruction.