Geographic atrophy (GA), an untreatable advanced form of age-related macular degeneration, results from retinal pigmented epithelium (RPE) cell degeneration. Here we show that the microRNA (miRNA)-processing enzyme DICER1 is reduced in the RPE of humans with GA, and that conditional ablation of Dicer1, but not seven other miRNA-processing enzymes, induces RPE degeneration in mice. DICER1 knockdown induces accumulation of Alu RNA in human RPE cells and Alu-like B1 and B2 RNAs in mouse RPE. Alu RNA is increased in the RPE of humans with GA, and this pathogenic RNA induces human RPE cytotoxicity and RPE degeneration in mice. Antisense oligonucleotides targeting Alu/B1/B2 RNAs prevent DICER1 depletion-induced RPE degeneration despite global miRNA downregulation. DICER1 degrades Alu RNA, and this digested Alu RNA cannot induce RPE degeneration in mice. These findings reveal a miRNA-independent cell survival function for DICER1 involving retrotransposon transcript degradation, show that Alu RNA can directly cause human pathology, and identify new targets for a major cause of blindness.