Major fraction of eukaryotic genomes is composed of transposons. Mobilization of these transposons leads to mutations and genomic instability. In animals, these selfish genetic elements are regulated by a class of small RNAs called PIWI interacting RNAs (piRNAs). Thus host piRNA pathway acts as a defense against pathogenic transposons. Many piRNA pathway genes are rapidly evolving indicating that they are involved in a host-pathogen arms race. In my thesis, I investigated the nature of this arms race by checking functional consequences of the sequence diversity in piRNA pathway genes. In order to study the functional consequences of the divergence in piRNA pathway genes, we swapped piRNA pathway genes between two sibling Drosophila species, Drosophila melanogaster and Drosophila simulans. We focused on RDC complex, composed of Rhino, Deadlock and Cutoff, which specifies piRNA clusters and regulates transcription from clusters. None of the D. simulans RDC complex proteins function in D. melanogaster. Rhino and Deadlock interact and colocalize in D. simulans and D. melanogaster, but D. simulans Rhino does not bind D. melanogaster Deadlock, due to substitutions in the rapidly evolving Shadow domain. Cutoff from D. simulans stably binds and traps D. melanogaster Deadlock. Adaptive evolution has thus generated cross-species incompatibilities in the piRNA pathway which may contribute in reproductive isolation.