BACKGROUND: In eukaryotes, RNA interference (RNAi) is a major mechanism of 
defense against viruses and transposable elements as well of regulating 
translation of endogenous mRNAs. The RNAi systems recognize the target RNA 
molecules via small guide RNAs that are completely or partially complementary to 
a region of the target. Key components of the RNAi systems are proteins of the 
Argonaute-PIWI family some of which function as slicers, the nucleases that 
cleave the target RNA that is base-paired to a guide RNA. Numerous prokaryotes 
possess the CRISPR-associated system (CASS) of defense against phages and 
plasmids that is, in part, mechanistically analogous but not homologous to 
eukaryotic RNAi systems. Many prokaryotes also encode homologs of Argonaute-PIWI 
proteins but their functions remain unknown.
RESULTS: We present a detailed analysis of Argonaute-PIWI protein sequences and 
the genomic neighborhoods of the respective genes in prokaryotes. Whereas 
eukaryotic Ago/PIWI proteins always contain PAZ (oligonucleotide binding) and 
PIWI (active or inactivated nuclease) domains, the prokaryotic Argonaute 
homologs (pAgos) fall into two major groups in which the PAZ domain is either 
present or absent. The monophyly of each group is supported by a phylogenetic 
analysis of the conserved PIWI-domains. Almost all pAgos that lack a PAZ domain 
appear to be inactivated, and the respective genes are associated with a variety 
of predicted nucleases in putative operons. An additional, uncharacterized 
domain that is fused to various nucleases appears to be a unique signature of 
operons encoding the short (lacking PAZ) pAgo form. By contrast, almost all 
PAZ-domain containing pAgos are predicted to be active nucleases. Some proteins 
of this group (e.g., that from Aquifex aeolicus) have been experimentally shown 
to possess nuclease activity, and are not typically associated with genes for 
other (putative) nucleases. Given these observations, the apparent extensive 
horizontal transfer of pAgo genes, and their common, statistically significant 
over-representation in genomic neighborhoods enriched in genes encoding proteins 
involved in the defense against phages and/or plasmids, we hypothesize that 
pAgos are key components of a novel class of defense systems. The PAZ-domain 
containing pAgos are predicted to directly destroy virus or plasmid nucleic 
acids via their nuclease activity, whereas the apparently inactivated, 
PAZ-lacking pAgos could be structural subunits of protein complexes that 
contain, as active moieties, the putative nucleases that we predict to be 
co-expressed with these pAgos. All these nucleases are predicted to be DNA 
endonucleases, so it seems most probable that the putative novel 
phage/plasmid-defense system targets phage DNA rather than mRNAs. Given that in 
eukaryotic RNAi systems, the PAZ domain binds a guide RNA and positions it on 
the complementary region of the target, we further speculate that pAgos function 
on a similar principle (the guide being either DNA or RNA), and that the 
uncharacterized domain found in putative operons with the short forms of pAgos 
is a functional substitute for the PAZ domain.
CONCLUSION: The hypothesis that pAgos are key components of a novel prokaryotic 
immune system that employs guide RNA or DNA molecules to degrade nucleic acids 
of invading mobile elements implies a functional analogy with the prokaryotic 
CASS and a direct evolutionary connection with eukaryotic RNAi. The predictions 
of the hypothesis including both the activities of pAgos and those of the 
associated endonucleases are readily amenable to experimental tests.