In animals, the three main classes of small RNAs are microRNAs, short interfering RNAs, and PIWI-interacting RNAs. All three RNA species silence gene expression post-transcriptionally through interaction with the ARGONAUTE family of proteins. In mammals in particular, microRNAs are ubiquitously expressed, are essential for development, and perform numerous functions in a variety of cells and tissues. piRNAs are expressed almost exclusively in the germline, and are essential for male fertility and defense against transposons. Endogenous siRNAs are only expressed in germ cells and embryonic stem cells and have not been ascribed a functional role. By engineering a mouse that expresses a modified ARGONAUTE protein, we disrupt the function of endo-siRNAs exclusively in oocytes and find that females are infertile. Oocytes with an impaired siRNA pathway fail to complete meiosis I, and display severe spindle formation and chromosome alignment defects. Their transcriptome is widely perturbed and expression of the most abundant transposon is increased. These findings indicate that endo-siRNAs are essential for female fertility in mouse, are required for spindle formation, chromosome congression, and defense against transposons. This study unequivocally demonstrates an essential function for siRNAs in mammals, mediated through endonucleolytic cleavage of targets, and provides an explanation for the selective pressure that one AGO protein retains catalytic activity.