In Drosophila melanogaster the reciprocal "Ping-Pong" cycle of PIWI-interacting RNA (piRNA)-directed RNA cleavage catalyzed by the endonuclease (or "Slicer") activities of the PIWI proteins Aubergine (Aub) and Argonaute3 (AGO3) has been proposed to expand the secondary piRNA population. However, the role of AGO3/Aub Slicer activity in piRNA amplification remains to be explored. We show that AGO3 Slicer activity is essential for piRNA amplification and that AGO3 inhibits the homotypic Aub:Aub Ping-Pong process in a Slicer-independent manner. We also find that expression of an AGO3 Slicer mutant causes ectopic accumulation of Armitage, a key component in the primary piRNA pathway, in the Drosophila melanogaster germline granules known as nuage. AGO3 also coexists and interacts with Armitage in the mitochondrial fraction. Furthermore, AGO3 acts in conjunction with the mitochondria-associated protein Zucchini to control the dynamic subcellular localization of Armitage between mitochondria and nuage in a Slicer-dependent fashion. Collectively, our findings uncover a new mechanism that couples mitochondria with nuage to regulate secondary piRNA amplification.