MicroRNAs (miRNAs) in plants and animals function as post-transcriptional regulators of target genes, many of which are involved in multicellular development. miRNAs guide effector complexes to target mRNAs through base-pair complementarity, facilitating site-specific cleavage or translational repression. Biogenesis of miRNAs involves nucleolytic processing of a precursor transcript with extensive foldback structure. Here, we provide evidence that genes encoding miRNAs in plants originated by inverted duplication of target gene sequences. Several recently evolved genes encoding miRNAs in Arabidopsis thaliana and other small RNA-generating loci possess the hallmarks of inverted duplication events that formed the arms on each side of their respective foldback precursors. We propose a model for miRNA evolution that suggests a mechanism for de novo generation of new miRNA genes with unique target specificities.