MicroRNAs (miRNAs) modulate transcript stability and translation. Functional mature miRNAs are processed from one or both arms of the hairpin precursor. The miR-100/10 family has undergone three independent evolutionary events that have switched the arm from which the functional miRNA is processed. The dominant miR-10 sequences in the insects Drosophila melanogaster and Tribolium castaneum are processed from opposite arms. However, the duplex produced by Dicer cleavage has an identical sequence in fly and beetle. Expression of the Tribolium miR-10 sequence in Drosophila S2 cells recapitulates the native beetle pattern. Thus, arm usage is encoded in the primary miRNA sequence, but outside the mature miRNA duplex. We show that the predicted messenger RNA targets and inferred function of sequences from opposite arms differ significantly. Arm switching is likely to be general, and provides a fundamental mechanism to evolve the function of a miRNA locus and target gene network.