Piwi Argonautes and Piwi-interacting RNAs (piRNAs) mediate genome defense by targeting transposons. However, many piRNA species lack obvious sequence complementarity to transposons or other loci; only one C. elegans transposon is a known piRNA target. Here, we show that, in mutants lacking the Piwi Argonaute PRG-1 (and consequently its associated piRNAs/21U-RNAs), many silent loci in the germline exhibit increased levels of mRNA expression with a concomitant depletion of RNA-dependent RNA polymerase (RdRP)-derived secondary small RNAs termed 22G-RNAs. Sequences depleted of 22G-RNAs are proximal to potential target sites that base pair imperfectly but extensively to 21U-RNAs. We show that PRG-1 is required to initiate, but not to maintain, silencing of transgenes engineered to contain complementarity to endogenous 21U-RNAs. Our findings support a model in which C. elegans piRNAs utilize their enormous repertoire of targeting capacity to scan the germline transcriptome for foreign sequences, while endogenous germline-expressed genes are actively protected from piRNA-induced silencing. Display omitted ► Transcriptome-wide surveillance of germline transcripts by C. elegans piRNAs ► C. elegans piRNAs use imperfect base pairing to initiate silencing ► Maintenance of silencing depends on the WAGO/RdRP pathway ► mRNAs targeted by the CSR-1 Argonaute appear to be protected from silencing piRNA-mediated silencing persists for dozens of generations in worms, and a hand-off from piRNA-binding proteins to the nuclear WAGO Argonaute transcriptional silencing pathway means that the initial trigger does not need to be present to maintain the transgenerational effect.