Recent observations of RNA interference (RNAi) in the nuclei of human cells raise key questions about the extent to which nuclear and cytoplasmic RNAi pathways are shared. By directly visualizing the localization of small interfering RNA (siRNA) in live human cells, we show here that siRNA either selectively localizes in the cytoplasm or translocates into the nucleus, depending on where the silencing target RNA resides. Two siRNAs that target the small nuclear 7SK and U6 RNAs localize into the nucleus as duplexes. In contrast, an siRNA targeting the cytoplasmic hepatitis C virus replicon RNA dissociates, and only antisense strand distributes in the cytoplasm of the cells harboring the target RNA, whereas sense strand gets degraded. At the same time, both strands of the latter siRNA are distributed throughout the cytoplasm and nucleus in cells lacking the silencing target RNA. These results suggest the existence of a mechanism by which the RNAi machinery orchestrates a target-determined localization of the siRNA and the corresponding RNAi activity, and also provide evidence for formation of nuclear-programmed active RNA induced silencing complexes directly in the nucleus.