Cell proliferation needs to be tightly regulated during development and organ homeostasis. Myc is a key transcription factor and oncogene that promotes proliferation, but the molecular control of its expression, a focal point of size control in development and disease, is still incompletely understood. Now, Leonie Quinn and colleagues discover a new role for Drosophila AGO1, an Argonaute family protein involved in post-transcriptional gene silencing and formerly implicated in Myc translational repression, in Myc transcriptional regulation. They first show that AGO1 forms a complex with a crucial regulator of Myc transcription, Psi, in fly tissues, and then show these two factors also interact genetically. AGO1 depletion increases nucleolar size and ribosomal DNA transcription, leading to bigger cells; nucleolar expansion is diminished when either Myc or Psi are co-depleted. AGO1 knockdown increases Myc RNA and protein levels, leading to a corresponding increase in expression of Myc targets. AGO1 localises to euchromatin in the nucleus but with only a small degree of overlap with Polycomb body foci and insulator domains. Finally, AGO1 depletion activates the Myc promoter and RNA Pol II-mediated transcription, and AGO1 is enriched on Myc regulatory regions, particularly on the promoter. AGO1 thus inhibits proliferation via transcriptional regulation of Myc.