Dicer is a central enzymatic player in RNA interference (RNAi) pathways that acts to regulate gene expression in nearly all eukaryotic cells. In mammals, the well documented cytoplasmic role of Dicer in generating small interfering (si) and micro (mi)RNA, is known to lead to the selective degradation and translational repression of messenger (m)RNA. The view persists that mammalian Dicer has no direct nuclear function, even though in other eukaryotes such as plants, drosophila, C. elegans5 and some yeast the nuclear role of Dicer in transcriptional gene silencing (TGS) through siRNA formation is well established. More recent analysis of potential mammalian nuclear RNAi has revealed that it is possible to induce TGS by nuclear RNAi pathways and also that loss of Dicer can directly impact on genic and intergenic transcriptional activity. Here we show unequivocally that Dicer is present in both the nucleus and cytoplasm, but that its nuclear levels are tightly regulated. In its nuclear manifestation Dicer interacts with RNA polymerase II (Pol II) at actively transcribed gene loci. Loss of Dicer causes the immediate appearance of endogenous dsRNA leading to induction of the interferon response pathway and consequent cell death. Our results suggest that Pol II associated Dicer restricts endogenous dsRNA formation, presumably from overlapping non-coding RNA transcription units (natural antisense RNA). Failure to do so has catastrophic effects on cell function. Taken together, we present here a miRNA independent role for human nuclear Dicer.