Small repeat-associated siRNAs (rasiRNAs) mediate silencing of retrotransposons and the Stellate locus. Mutations in the Drosophila rasiRNA pathway genes armitage and aubergine disrupt embryonic axis specification, triggering defects in microtubule polarization as well as asymmetric localization of mRNA and protein determinants in the developing oocyte. Mutations in the ATR/Chk2 DNA damage signal transduction pathway dramatically suppress these axis specification defects, but do not restore retrotransposon or Stellate silencing. Furthermore, rasiRNA pathway mutations lead to germline-specific accumulation of gamma-H2Av foci characteristic of DNA damage. We conclude that rasiRNA-based gene silencing is not required for axis specification, and that the critical developmental function for this pathway is to suppress DNA damage signaling in the germline.