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The adenovirus (Ad) genome encodes two small noncoding RNAs, VA-RNA I and II, which support Ad replication by antagonizing the antiviral action associated with the Ad-induced activation of double-stranded RNA-dependent protein kinase (PKR). VA-RNAs are also processed in a manner similar to microRNAs (miRNAs), resulting in the production of VA-RNA-derived miRNAs (mivaRNAs). mivaRNAs are incorporated into the RNA-induced silencing complex (RISC) and exhibit posttranscriptional silencing in a manner similar to miRNAs. However, it remained to be clarified whether Dicer-mediated processing of VA-RNAs and the subsequent production of mivaRNAs were crucial for Ad replication. Recently, we have found that Dicer efficiently suppresses Ad replication via cleavage of VA-RNAs to mivaRNAs. Based on these findings, we have developed an oncolytic Ad that shows tumor cell-specific replication and carries an expression cassette of short-hairpin RNA (shRNA) against Dicer (shDicer). The oncolytic Ad expressing shDicer exhibited more efficient replication and oncolytic activity both in vitro and in vivo. In addition, we demonstrated that shRNA-mediated RNA interference is competitively inhibited by VA-RNAs. A replication-incompetent Ad vector lacking VA-RNA expression (AdΔVR vector) exhibited superior knockdown efficiencies compared with a conventional Ad vector, indicating that an shRNA-expressing AdΔVR vector is a powerful framework for shRNA-mediated knockdown. We believe that functional analyses of Ad-encoded genes, including VA-RNAs, could lead to the development of novel recombinant Ads.