Although endogenous siRNAs (endo-siRNAs) have been described in many species, still little is known about their endogenous utility. Here, we show that Drosophila hairpin RNAs (hpRNAs) generate an endo-siRNA class with predominant expression in testes. Although hpRNAs are universally recently evolved, we identify highly complementary protein-coding targets for all hpRNAs. Importantly, we find broad evidence for evolutionary divergences that preferentially maintain compensatory pairing between hpRNAs and targets, serving as first evidence for adaptive selection for siRNA-mediated target regulation in metazoans. We demonstrate organismal impact of hpRNA activity, since knockout of hpRNA1 derepresses its target ATP synthase-β in testes and compromises spermatogenesis and male fertility. Moreover, we reveal surprising male-specific impact of RNAi factors on germ cell development and fertility, consistent with testis-directed function of the hpRNA pathway. Finally, the collected hpRNA loci chronicle an evolutionary timeline that reflects their origins from prospective target genes, mirroring a strategy described for plant miRNAs.