Activation of the type I interferon (IFN) pathway by small interfering RNA (siRNA) is a major contributor to the off-target effects of RNA interference in mammalian cells. While IFN induction complicates gene function studies, immunostimulation by siRNAs may be beneficial in certain therapeutic settings. Various forms of siRNA, meeting different compositional and structural requirements, have been reported to trigger IFN activation. The consensus is that intracellularly expressed short-hairpin RNAs (shRNAs) are less prone to IFN activation because they are not detected by the cell-surface receptors. In particular, lentiviral vector-mediated transduction of shRNAs has been reported to avoid IFN response. Here we identify a shRNA that potently activates the IFN pathway in human cells in a sequence- and 5′-triphosphate-dependent manner. In addition to suppressing its intended mRNA target, expression of the shRNA results in dimerization of interferon regulatory factor-3, activation of IFN promoters and secretion of biologically active IFNs into the extracellular medium. Delivery by lentiviral vector transduction did not avoid IFN activation by this and another, unrelated shRNA. We also demonstrated that retinoic-acid-inducible gene I, and not melanoma differentiation associated gene 5 or toll-like receptor 3, is the cytoplasmic sensor for intracellularly expressed shRNAs that trigger IFN activation.