Epigenetic information is frequently erased near the start of each new generation. In some cases, however, epigenetic information can be transmitted from parent to progeny (multigenerational epigenetic inheritance). A particularly notable example of this type of epigenetic inheritance is double-stranded RNA-mediated gene silencing in Caenorhabditis elegans. This RNA-mediated interference (RNAi) can be inherited for more than five generations. To understand this process, here we conduct a genetic screen for nematodes defective in transmitting RNAi silencing signals to future generations. This screen identified the heritable RNAi defective 1 (hrde-1) gene. hrde-1 encodes an Argonaute protein that associates with small interfering RNAs in the germ cells of progeny of animals exposed to double-stranded RNA. In the nuclei of these germ cells, HRDE-1 engages the nuclear RNAi defective pathway to direct the trimethylation of histone H3 at Lys 9 (H3K9me3) at RNAi-targeted genomic loci and promote RNAi inheritance. Under normal growth conditions, HRDE-1 associates with endogenously expressed short interfering RNAs, which direct nuclear gene silencing in germ cells. In hrde-1- or nuclear RNAi-deficient animals, germline silencing is lost over generational time. Concurrently, these animals exhibit steadily worsening defects in gamete formation and function that ultimately lead to sterility. These results establish that the Argonaute protein HRDE-1 directs gene-silencing events in germ-cell nuclei that drive multigenerational RNAi inheritance and promote immortality of the germ-cell lineage. We propose that C. elegans use the RNAi inheritance machinery to transmit epigenetic information, accrued by past generations, into future generations to regulate important biological processes.