RNA silencing is a form of post-transcriptional gene regulation, in which a small RNA guides a member of the Argonaute protein family in an effector complex to repress target gene expression. piRNAs, found in germ cells, are the most recently discovered major subset of small RNAs. A key known function of piRNA is to repress the transposable elements in the germline and maintain the germline genome integrity. The defining features of the piRNAs are 1) they are ubiquitously methylated at the 3’-end of the 2’-OH group by methyltransferase Hen1; 2) they associate exclusively with the Piwi subfamily Argonaute proteins. Much is not understood about the biogenesis and the regulation of the piRNA pathway. One of the fundamental questions is how the 3’-end of the piRNA is generated and recognised specifically by Piwi but not by Ago subfamily Argonaute proteins. In this thesis, the high resolution crystal structure of the Aubergine PAZ domain, a domain from a Piwi subfamily Argonaute, bound to a 7 mer single-stranded methylated piRNA ‘mimic’, reveals the mode of recognition for the 3’-end of piRNAs by Piwi subfamily Argonautes. The structure provides the molecular basis for why Piwi but not Ago PAZ domains preferentially bind to RNAs with 2’-O-methylation at the 3’-end, thus conferring substrate specificity. The structural results are confirmed by biochemical studies. Biochemical and biophysical studies on the methyltransferase Hen1 have provided insights into substrate specificity for piRNA 3’-end methylation and revealed a potential regulatory role for the C-terminal region of the protein. Extensive biochemical analysis defined a minimal active Hen1/short RNA complex, though crystallisation screening yielded no crystals for structure determination. Overall, this study provides insights into the generation and molecular recognition of the piRNA in animals.