Eukaryotic cells regulate 5' triphosphorylated (ppp-) RNAs to promote cellular functions and prevent recognition by antiviral RNA sensors. For example, RNA capping enzymes possess triphosphatase domains that remove the γ phosphates of ppp-RNAs during RNA capping. Members of the closely related PIR1 family of RNA polyphosphatases remove both the β and γ phosphates from ppp-RNAs. Here we show that C. elegans PIR-1 dephosphorylates ppp-RNAs made by cellular RdRPs and is required for the maturation of 26G-RNAs, Dicer-dependent small RNAs that regulate thousands of genes during spermatogenesis and embryogenesis. PIR-1 also regulates the CSR-1 22G-RNA pathway and has critical functions in both somatic and germline development. Our findings suggest that PIR-1 modulates both Dicer-dependent and -independent Argonaute pathways, and provide insight into how cells and viruses use a conserved RNA phosphatase to regulate and respond to ppp-RNA species.