Plastid transformation technology has been widely used to express traits of potential commercial importance, though the technology has been limited to traits that function while sequestered in the organelle. Prior research indicates that plastid contents can escape from the organelle, suggesting a possible mechanism for engineering plastid transgenes to function in other cellular locations. To test this hypothesis, we created tobacco (Nicotiana tabacum cv. Petit Havana) plastid transformants that express a fragment of the nuclear-encoded Phytoene desaturase (PDS) gene capable of catalyzing post-transcriptional gene silencing if RNA escapes into the cytoplasm. We found multiple lines of direct evidence that plastid-encoded PDS transgenes affect nuclear PDS gene silencing: knockdown of the nuclear-encoded PDS mRNA and/or its apparent translational inhibition, biogenesis of 21-nucleotide (nt) phased small interfering RNAs (phasiRNAs), and pigment-deficient plants. Furthermore, plastid-expressed dsRNA with no cognate nuclear-encoded pairing partner also produced abundant 21-nt phasiRNAs in the cytoplasm, demonstrating that a nuclear-encoded template is not required for siRNA biogenesis. Our results indicate that RNA escape from plastids to the cytoplasm occurs generally, with functional consequences that include entry into the gene silencing pathway. Furthermore, we uncover a method to produce plastid-encoded traits with functions outside of the organelle and open additional fields of study in plastid development, compartmentalization, and small RNA biogenesis.