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Piwi-interacting RNAs (piRNAs) silence transposons to safeguard genome integrity in animals. However, the functions of the many piRNAs that do not map to transposons remain unknown. Here, we show that piRNA targeting in Caenorhabditis elegans can tolerate a few mismatches but prefer perfect pairing at the seed region. The broad targeting capacity of piRNAs underlies the germline silencing of transgenes in C. elegans. Transgenes engineered to avoid piRNA recognition are stably expressed. Many endogenous germline-expressed genes also contain predicted piRNA targeting sites, and periodic An/Tn clusters (PATCs) are an intrinsic signal that provides resistance to piRNA silencing. Together, our study revealed the piRNA targeting rules and highlights a distinct strategy that C. elegans uses to distinguish endogenous from foreign nucleic acids.