Center for Genome Research, M. S. University of Baroda RNA interference (RNAi) is a system within living cells that helps to control which genes are active and how active they are. Two types of small RNA molecules microRNA (miRNA) and small interfering RNA (siRNA) are central to RNA interference. siRNAs derive from long double stranded RNA precursors and are perfectly complementary to a particular target mRNA and cleaves that target, whereas miRNAs are generated from short hairpin RNA precursors and are partially complementary to the target mRNA. MicroRNAs (miRNAs) are small single-stranded RNA molecules with a length of 21-23 nucleotides that regulate gene expression post-transcriptionally. They have a regulatory function that is down regulation of gene expression either by degradation of messenger RNA or by inhibition of protein translation. Both pathways are found in plants and animals. However, in fungi, evidence exists only for siRNA pathway. Although no experimental evidence for the presence of miRNA pathways in fungi has been published, various developmental processes point to the possibility that miRNAs are also encoded in the genome of fungi. Unfortunately, traditional gene expression techniques like Northern blot, reverse transcription PCR (RT-PCR), SAGE, and DNA microarrays are not always applicable to predict miRNAs due to the lack of sensitivity and specificity. Because of these disadvantages of experimental approach, computational methods have been developed to predict new miRNAs in worms, flies, and humans. This project was undertaken 1) to computationally predict the microRNA sequence patterns in the genome of 22 fungi using miRNA Search Tool, 2) to identify the target genes for predicted miRNAs using target prediction programs and, 3) to perform functional annotation of the target genes using various web resources. The results obtained from the analysis predicted microRNA sequences which shared sequence homology with some of the plant and animal miRNA. Most of the genes targeted by predicted microRNA were found to be highly conserved in pathogenic fungi and were involved in transcription regulation, DNA binding, ATP binding, protein and zinc ion binding while many other genes were hypothetical. It can be concluded from the analysis that microRNAs are well distributed among fungal genomes and may play an important role in controlling expression of genes which are responsible for transcription regulation, DNA binding, ATP binding and many other important physiological processes.