Recent studies have shown that small noncoding RNAs, such as microRNAs and siRNAs, regulate gene expression at multiple levels including chromatin architecture, transcription, RNA editing, RNA stability, and translation. Each form of RNA-dependent regulation has been generally found to silence homologous sequences and collectively called RNAi. To further study the regulatory role of small RNAs at the transcriptional level, we designed and synthesized 21-nt dsRNAs targeting selected promoter regions of human genes E-cadherin, p21(WAF1/CIP1) (p21), and VEGF. Surprisingly, transfection of these dsRNAs into human cell lines caused long-lasting and sequence-specific induction of targeted genes. dsRNA mutation studies reveal that the 5' end of the antisense strand, or "seed" sequence, is critical for activity. Mechanistically, the dsRNA-induced gene activation requires the Argonaute 2 (Ago2) protein and is associated with a loss of lysine-9 methylation on histone 3 at dsRNA-target sites. In conclusion, we have identified several dsRNAs that activate gene expression by targeting noncoding regulatory regions in gene promoters. These findings reveal a more diverse role for small RNA molecules in the regulation of gene expression than previously recognized and identify a potential therapeutic use for dsRNA in targeted gene activation.