Caenorhabditis elegans homologues of the retinoblastoma (Rb) tumour suppressor complex specify cell lineage during development. Here we show that mutations in Rb pathway components enhance RNA interference (RNAi) and cause somatic cells to express genes and elaborate perinuclear structures normally limited to germline-specific P granules. Furthermore, particular gene inactivations that disrupt RNAi reverse the cell lineage transformations of Rb pathway mutants. These findings suggest that mutations in Rb pathway components cause cells to revert to patterns of gene expression normally restricted to germ cells. Rb may act by a similar mechanism to transform mammalian cells.