Argonaute proteins are conserved throughout all domains of life. Recently characterized prokaryotic Argonaute proteins (pAgos) participate in host defense by DNA interference, whereas eukaryotic Argonaute proteins (eAgos) control a wide range of processes by RNA interference. Here we review molecular mechanisms of guide and target binding by Argonaute proteins, and describe how the conformational changes induced by target binding lead to target cleavage. On the basis of structural comparisons and phylogenetic analyses of pAgos and eAgos, we reconstruct the evolutionary journey of the Argonaute proteins through the three domains of life and discuss how different structural features of pAgos and eAgos relate to their distinct physiological roles.