Belle (Bel), the Drosophila homolog of the yeast DEAD-box RNA helicase DED1 and human DDX3, has been shown to be required for oogenesis and female fertility. Here we report a novel role of Bel in regulating the expression of transgenes. Abrogation of Bel by mutations or RNAi induces silencing of a variety of P-element-derived transgenes. This silencing effect depends on downregulation of their RNA levels. Our genetic studies have revealed that the RNA helicase Spindle-E (Spn-E), a nuage RNA helicase that plays a crucial role in regulating RNA processing and PIWI-interacting RNA (piRNA) biogenesis in germline cells, is required for loss-of-bel-induced transgene silencing. Conversely, Bel abrogation alleviates the nuage-protein mislocalization phenotype in spn-E mutants, suggesting a competitive relationship between these two RNA helicases. Additionally, disruption of the chromatin remodeling factor Mod(mdg4) or the microRNA biogenesis enzyme Dicer-1 (Dcr-1) also alleviates the transgene-silencing phenotypes in bel mutants, suggesting the involvement of chromatin remodeling and microRNA biogenesis in loss-of-bel-induced transgene silencing. Finally we show that genetic inhibition of Bel function leads to de novo generation of piRNAs from the transgene region inserted in the genome, suggesting a potential piRNA-dependent mechanism that may mediate transgene silencing as Bel function is inhibited.