Endogenous short RNAs (esRNAs) play diverse roles in eukaryotes and usually are produced from double-stranded RNA (dsRNA) by Dicer. esRNAs are grouped into different classes based on biogenesis and function but not all classes are present in all three eukaryotic kingdoms. The esRNA register of fungi is poorly described compared to other eukaryotes and it is not clear what esRNA classes are present in this kingdom and whether they regulate the expression of protein coding genes. However, evidence that some dicer mutant fungi display altered phenotypes suggests that esRNAs play an important role in fungi. Here, we show that the basal fungus Mucor circinelloides produces new classes of esRNAs that map to exons and regulate the expression of many protein coding genes. The largest class of these exonic-siRNAs (ex-siRNAs) are generated by RNA-dependent RNA Polymerase 1 (RdRP1) and dicer-like 2 (DCL2) and target the mRNAs of protein coding genes from which they were produced. Our results expand the range of esRNAs in eukaryotes and reveal a new role for esRNAs in fungi.