Most plant and animal microRNAs (miRNAs) are transcribed by RNA polymerase II. We previously discovered miRNA-like small RNAs (milRNAs) in the filamentous fungus Neurospora crassa and uncovered at least four different pathways for milRNA production. To understand the evolutionary origin of milRNAs, we determined the roles of polymerases II and III (Pol II and Pol III) in milRNA transcription. Our results show that Pol III is responsible for the transcription of the major milRNAs produced in this organism. The inhibition of Pol III activity by an inhibitor or by gene silencing abolishes the production of most abundant milRNAs and pri-milRNAs. In addition, Pol III associates with these milRNA producing loci. Even though silencing of Pol II does not affect the synthesis of the most abundant milRNAs, Pol II or both Pol II and Pol III are associated with some milRNA-producing loci, suggesting a regulatory interaction between the two polymerases for some milRNA transcription. Furthermore, we show that one of the Pol III-transcribed milRNAs is derived from a tRNA precursor, and its biogenesis requires RNase Z, which cleaves the tRNA moiety to generate pre-milRNA. Our study identifies the transcriptional machinery responsible for the synthesis of fungal milRNAs and sheds light on the evolutionary origin of eukaryotic small RNAs.