In Neurospora crassa, sequence-specific inhibition of endogenous genes can be induced by the introduction of transgenic DNA homologous to the target gene, through the mechanism of post-transcriptional gene silencing (PTGS) known as quelling. The application of this strategy to inactivate genes in N. crassa has, to date, been restricted by a limited silencing efficiency and instability of the silenced phenotype. In this study we show that the use of constructs that express hairpin double stranded RNA (dsRNA) permits efficient gene silencing by-passing limiting events in the quelling triggering process occurring upstream of dsRNA production. We found that silenced strains expressing a hairpin RNA displayed higher phenotypic stability compared with quelled strains. Moreover, we show that gene silencing can be modulated by expressing the double stranded RNA from an inducible promoter. Together these results make this method suitable for producing hypomorphic mutants in N. crassa.