RNaseIII ribonucleases act at the heart of RNA silencing pathways by processing precursor RNAs into mature microRNAs and siRNAs. In the fission yeast Schizosaccharomyces pombe, siRNAs are generated by the RNaseIII enzyme Dcr1 and are required for heterochromatin formation at centromeres. In this study, we have analyzed the subcellular localization of Dcr1 and found that it accumulates in the nucleus and is enriched at the nuclear periphery. Nuclear accumulation of Dcr1 depends on a short motif that impedes nuclear export promoted by the double-stranded RNA binding domain of Dcr1. Absence of this motif renders Dcr1 mainly cytoplasmic and is accompanied by remarkable changes in gene expression and failure to assemble heterochromatin. Our findings suggest that Dicer proteins are shuttling proteins and that the steady-state subcellular levels can be shifted toward either compartment.