Human tumors are characterized by widespread reduction in microRNA (miRNA) expression, although it is unclear how such changes come about and whether they have an etiological role in the disease. Importantly, miRNA knockdown has been shown to enhance the tumorigenic potential of human lung adenocarcinoma cells. A defect in miRNA processing is one possible mechanism for global downregulation. To explore this possibility in more detail in vivo, we have manipulated Dicer1 gene dosage in a mouse model of retinoblastoma. We show that although monoallelic loss of Dicer1 does not affect normal retinal development, it dramatically accelerates tumor formation on a retinoblastoma-sensitized background. Importantly, these tumors retain one wild-type Dicer1 allele and exhibit only a partial decrease in miRNA processing. Accordingly, in silico analysis of human cancer genome data reveals frequent hemizygous, but not homozygous, deletions of DICER1. Strikingly, complete loss of Dicer1 function in mice did not accelerate retinoblastoma formation. miRNA profiling of these tumors identified members of the let-7 and miR-34 families as candidate tumor suppressors in retinoblastoma. We conclude that Dicer1 functions as a haploinsufficient tumor suppressor. This finding has implications for cancer etiology and cancer therapy.