In Drosophila, the piRNAs that guide germline transposon silencing are produced from heterochromatic clusters marked by the HP1 homolog Rhino. We show that Rhino promotes cluster transcript association with UAP56 and the THO complex, forming RNA-protein assemblies that are unique to piRNA precursors. UAP56 and THO are ubiquitous RNA-processing factors, and null alleles of uap56 and the THO subunit gene tho2 are lethal. However, uap56(sz15) and mutations in the THO subunit genes thoc5 and thoc7 are viable but sterile and disrupt piRNA biogenesis. The uap56(sz15) allele reduces UAP56 binding to THO, and the thoc5 and thoc7 mutations disrupt interactions among the remaining THO subunits and UAP56 binding to the core THO subunit Hpr1. These mutations also reduce Rhino binding to clusters and trigger Rhino binding to ectopic sites across the genome. Rhino thus promotes assembly of piRNA precursor complexes, and these complexes restrict Rhino at cluster heterochromatin.