In flies, small silencing RNAs are sorted between Argonaute1 (Ago1), the central protein component of the microRNA (miRNA) pathway, and Argonaute2 (Ago2), which mediates RNA interference. Extensive double-stranded character—as is found in small interfering RNAs (siRNAs)—directs duplexes into Ago2, whereas central mismatches, like those found in miRNA/miRNA* duplexes, direct duplexes into Ago1. Central to this sorting decision is the affinity of the small RNA duplex for the Dcr-2/R2D2 heterodimer, which loads small RNAs into Ago2. Here, we show that while most Drosophila miRNAs are bound to Ago1, miRNA* strands accumulate bound to Ago2. Like siRNA loading, efficient loading of miRNA* strands in Ago2 favors duplexes with a paired central region and requires both Dcr-2 and R2D2. Those miRNA and miRNA* sequences bound to Ago2, like siRNAs diced in vivo from long double-stranded RNA, typically begin with cytidine, whereas Ago1-bound miRNA and miRNA* disproportionately begin with uridine. Consequently, some pre-miRNA generate two or more isoforms from the same side of the stem that differentially partition between Ago1 and Ago2. Our findings provide the first genome-wide test for the idea that Drosophila small RNAs are sorted between Ago1 and Ago2 according to their duplex structure and the identity of their first nucleotide.