In mammals, small RNAs are important players in post-transcriptional gene regulation. While their roles in mRNA destabilization and translational repression are well appreciated, their involvement in endonucleolytic cleavage of target RNAs is poorly understood. Very few microRNAs are known to guide RNA cleavage. Endogenous small interfering RNAs are expected to induce target cleavage, but their target genes remain largely unknown. We report a systematic study of small RNA-mediated endonucleolytic cleavage in mouse through integrative analysis of small RNA and degradome sequencing data without imposing any bias toward known small RNAs. Hundreds of small cleavage-inducing RNAs and their cognate target genes were identified, significantly expanding the repertoire of known small RNA-guided cleavage events. Strikingly, both small RNAs and their target sites demonstrated significant overlap with retrotransposons, providing evidence for the long-standing speculation that retrotransposable elements in mRNAs are leveraged as signals for gene targeting. Furthermore, our analysis showed that the RNA cleavage pathway is also present in human cells but affecting a different repertoire of retrotransposons. These results show that small RNA-guided cleavage is more widespread than previously appreciated. Their impact on retrotransposons in non-coding regions shed light on important aspects of mammalian gene regulation.