Nuclear RNAi silences transcription and promotes heterochromatin formation at target genes. In C. elegans, some of the key players of the nuclear RNAi pathway have been identified, as well as many of the targets. However, the molecular detail of the RNAi process and its regulation during development have remained unclear. Now, Sam Gu and colleagues use nuclear RNAi-targeted retrotransposon transcription in the worm gonad to address these issues. Single-molecule fluorescent in situ hybridization shows that the LTR retrotransposon Cer3 is transcribed in a small subset of cells in the distal gonad, but not in somatic tissues; another LTR retrotransposon, Cer8, shows a similar pattern. Cer3 transcription, which correlates with cell proliferation in the gonad, is repressed by the nuclear AGO protein HRDE-1 and three downstream histone methyltransferases (HMTs). Consistent with the nuclear localization of Cer3 and Cer8 transcripts, many nuclear RNAi target transcripts are enriched in the nucleus, though in a manner not dependent on HRDE-1. Strikingly, combined loss of HRDE-1 and HMTs causes ectopic Cer3 expression in somatic cells, though only one of the HMTs, MET-2, mediates this somatic repression. Finally, the authors identify a broad burst of Cer3 expression in the early embryo, and show that Cer3 repression is not regulated in the same way in the embryo as in the gonad. This work thus reveals the complex workings of nuclear RNAi during reproduction and development.