RNA interference (RNAi) is an evolutionarily conserved, sequence-specific gene-inactivation system that plays an essential role in many biological processes, such as genome defense against mobile DNA elements or regulation of factors involved in plant and animal development. In higher plants and invertebrates, it also functions as a powerful antiviral mechanism. To overcome antiviral RNAi, viruses have evolved suppressor proteins which counteract host RNAi-based antiviral processes and target one or more key points in the RNAi machinery. Here, we review recent progress in our understanding of the mechanism and function of antiviral RNAi in plants and on the viral responses through the expression of silencing suppressor proteins. As a counter-attack RNAi may also regulate innate immunity in plants and contribute to a novel layer of defense against pathogen attack. We also discuss emerging evidence that viruses use RNAi to manipulate host gene expression to modify the cellular environment for the benefit of invading viruses.