Silencing of ribosomal RNA genes (rDNA) requires binding of the chromatin remodelling complex NoRC to RNA that is complementary to the rDNA promoter. NoRC-associated RNA (pRNA) folds into a conserved stem-loop structure that is required for nucleolar localization and rDNA silencing. Mutations that disrupt the stem-loop structure impair binding of TIP5, the large subunit of NoRC, to pRNA and abolish targeting of NoRC to nucleoli. Binding to pRNA results in a conformational change of TIP5, as shown by enhanced sensitivity of TIP5 towards trypsin digestion. Our results indicate an RNA-dependent mechanism that targets NoRC to chromatin and facilitates the interaction with co-repressors that promote heterochromatin formation and rDNA silencing.