RNA interference (RNAi) is an important phenomenon that has diverse genetic regulatory functions at the pre- and posttranscriptional levels. The major trigger for the RNAi pathway is double-stranded RNA (dsRNA). dsRNA is processed to generate various types of major small noncoding RNAs (ncRNAs) that include microRNAs (miRNAs), small interfering RNAs (siRNAs) and PIWI-interacting RNAs (piRNAs) in Drosophila melanogaster (D. melanogaster). Functionally, these small ncRNAs play critical roles in virtually all biological systems and developmental pathways. Identification and processing of dsRNAs and activation of RNAi machinery are the three major academic interests that surround RNAi research. Mechanistically, some of the important biological functions of RNAi are achieved through: (i) supporting genomic stability via degradation of foreign viral genomes; (ii) suppressing the movement of transposable elements and, most importantly, (iii) post-transcriptional regulation of gene expression by miRNAs that contribute to regulation of epigenetic modifications such as heterochromatin formation and genome imprinting. Here, we review various routes of small ncRNA biogenesis, as well as different RNAi-mediated pathways in D. melanogaster with a particular focus on signaling pathways. In addition, a critical discussion of the most relevant and latest findings that concern the significant contribution of small ncRNAs to the regulation of D. melanogaster physiology and pathophysiology is presented.