Background: MicroRNAs (miRNAs) are ∼22 nucleotide (nt) small RNAs that control development, physiology, and pathology in animals and plants. Production of miRNAs involves the sequential processing of primary hairpin-containing RNA polymerase II transcripts by the RNase III enzymes Drosha in the nucleus and Dicer in the cytoplasm. miRNA duplexes then assemble into Argonaute proteins to form the RNA-induced silencing complex (RISC). In mature RISC, a single-stranded miRNA directs the Argonaute protein to bind partially complementary sequences, typically in the 3′ untranslated regions of messenger RNAs, repressing their expression. Results: Here, we show that after loading into Argonaute1 (Ago1), more than a quarter of all Drosophila miRNAs undergo 3′ end trimming by the 3′-to-5′ exoribonuclease Nibbler (CG9247). Depletion of Nibbler by RNA interference (RNAi) reveals that miRNAs are frequently produced by Dicer-1 as intermediates that are longer than ∼22 nt. Trimming of miRNA 3′ ends occurs after removal of the miRNA strand from pre-RISC and may be the final step in RISC assembly, ultimately enhancing target messenger RNA repression. In vivo, depletion of Nibbler by RNAi causes developmental defects. Conclusions: We provide a molecular explanation for the previously reported heterogeneity of miRNA 3′ ends and propose a model in which Nibbler converts miRNAs into isoforms that are compatible with the preferred length of Ago1-bound small RNAs.