RNA interference (RNAi)-related pathways affect gene activity by sequence-specific recruitment of Ago proteins to mRNA target molecules. The sequence specificity of this process stems from small RNA (sRNA) co-factors bound by the Ago protein. Stability of sRNA molecules in some pathways is in part regulated by Hen1-mediated methylation of their 3' ends. Here we describe the effects of the Caenorhabditis elegans HEN1 RNA-methyl-transferase homolog, HENN-1, on the different RNAi pathways in this nematode. We reveal differential effects of HENN-1 on the two pathways that are known to employ methylated sRNA molecules: the 26G and 21U pathways. Surprisingly, in the germline, stability of 21U RNAs, the C. elegans piRNAs, is only mildly affected by loss of methylation; and introduction of artificial 21U target RNA does not further destabilize non-methylated 21U RNAs. In contrast, most 26G RNAs display reduced stability and respond to loss of HENN-1 by displaying increased 3'-uridylation frequencies. Within the 26G RNA class, we find that specifically ERGO-1-bound 26G RNAs are modified by HENN-1, while ALG-3/ALG-4-bound 26G RNAs are not. Global gene expression analysis of henn-1 mutants reveals mild effects, including down-regulation of many germline-expressed genes. Our data suggest that, apart from direct effects of reduced 26G RNA levels of henn-1 on gene expression, most effects on global gene expression are indirect. These studies further refine our understanding of endogenous RNAi in C. elegans and the roles for Hen1 like enzymes in these pathways.