Colonization of genomes by a new selfish genetic element is detrimental to the host species and must lead to an efficient, repressive response. In vertebrates as well as in Drosophila, piRNAs repress transposons in the germ line, whereas endogenous siRNAs take on this role in somatic cells. We show that their biogenesis depends on a new isoform of the Drosophila TRBP homologue loquacious, which arises by alternative polyadenylation and is distinct from the one that functions during the biogenesis of miRNAs. For endo-siRNAs and piRNAs, it is unclear how an efficient response can be initiated de novo. Our experiments establish that the endo-siRNA pathway will target artificially introduced sequences without the need for a pre-existing template in the genome. This response is also triggered in transiently transfected cells, thus genomic integration is not essential. Deep sequencing showed that corresponding endo-siRNAs are generated throughout the sequence, but preferentially from transcribed regions. One strand of the dsRNA precursor can come from spliced mRNA, whereas the opposite strand derives from independent transcripts in antisense orientation.