RNA interference is a potent gene silencing pathway initiated by short molecules of double-stranded RNA. Small interfering RNAs (siRNAs) with full sequence complementarity to mRNAs induce cleavage of their target transcripts in the cytoplasm. Recent evidence has shown, however, that siRNAs can also function in the nucleus of mammalian cells to affect changes in chromatin structure. When targeted to promoter regions, siRNAs load into the effector protein Argonaute-1 (AGO1) and direct the formation of silent chromatin domains. This mechanism is known as transcriptional gene silencing (TGS), and the development of TGS as a novel therapeutic modality would be applicable to chronic diseases where long-term, heritable silencing of target genes is warranted. Here we discuss how small RNAs can be used to direct TGS in mammalian cells.