RNAi was discovered in the year 1990, when, insertion of a transgene for flower colour in Petunia with a goal to improve flower colour, instead produced flowers with complete loss of colour. This phenomenon of gene silencing was later described as RNA interference (RNAi) and was found to depend on the production of double stranded RNA (dsRNA). During the last abour a decade, this phenomenon of RNAi was also found to be involved in RNA-dependent DNA methylation and histone modifications, which are the two major phenomena involved in generating epigenetic variation. In this brief review, we first describe how RNAi was discovered and what is the machinery involved in this process, and then-discuss the possible mechanisms of RNAi-mediated DNA methylation and histone modification. Examples both from plants and animals, where RNAi-mediated epigenetic variation has been documented, have also been briefly described towards the end of this review. These examples in plants include paramutations and developmental transitions from zygote to embryo (e.g., FWA locus), from juvenile to adult vegetative phase, and from vegetative phase to flowering phase (e.g., FLC locus). Similarly in animals, RNA-mediated epigenetic changes include involvement of Polycomb Group (PcG) protein in regulation of gene expression, X-chromosome inactivation (Xic and Xist) for dosage compensation, imprinting of genes Igfr2 and KcnqI, and allelic exclusion during DNA rearrangement leading to the production of V(D)J genes for IgH (heavy chain immunoglobulins) in B-lymphocytes.