MicroRNAs (miRNAs) are fundamental regulatory elements of animal and plant gene expression. Although rapid progress in our understanding of miRNA biogenesis has been achieved by experimentation, computational approaches have also been influential in determining the general principles that are thought to govern miRNA target recognition and mode of action. We discuss how these principles are being progressively challenged by genetic and biochemical studies. In addition, we discuss the role of target-site-specific endonucleolytic cleavage, which is the hallmark of experimental RNA interference and a mechanism that is used by plant miRNAs and a few animal miRNAs. Generally thought to be merely a degradation mechanism, we propose that this might also be a biogenesis mechanism for biologically functional, non-coding RNA fragments.