RNAi factors and their catalytic activities are essential for heterochromatin assembly in S. pombe. This has led to the idea that siRNAs can promote H3K9 methylation by recruiting the cryptic loci regulator complex (CLRC), also known as recombination in K complex (RIKC), to the nucleation site. The conserved RNA-binding protein Rct1 (AtCyp59/SIG-7) interacts with splicing factors and RNA polymerase II. Here we show that Rct1 promotes processing of pericentromeric transcripts into siRNAs via the RNA recognition motif. Surprisingly, loss of siRNA in rct1 mutants has no effect on H3K9 di- or tri-methylation, resembling other splicing mutants, suggesting that post-transcriptional gene silencing per se is not required to maintain heterochromatin. Splicing of the Argonaute gene is also defective in rct1 mutants and contributes to loss of silencing but not to loss of siRNA. Our results suggest that Rct1 guides transcripts to the RNAi machinery by promoting splicing of elongating non-coding transcripts.