Conditional RNA interference (RNAi) enables spatial and/or temporal control over gene silencing. The currently available methods require coexpression of engineered proteins and/or modified promoters which may limit their applications. We designed a novel RNA architecture that combines a drug-inducible allosteric ribozyme with a microRNA precursor analogue that allows chemical induction of RNAi in mammalian cells. The compact and highly modular RNA design should facilitate the construction of conditional RNAi systems that can sense and respond to a variety of molecules recognized by RNA aptamers to regulate virtually any desired genes sensitive to RNAi.