The piRNA pathway is a piRNA-guided retrotransposon silencing system which includes processing of retrotransposon transcripts by PIWI-piRNAs in secondary piRNA biogenesis. Although several proteins participate in the piRNA pathway, the ones crucial for the cleavage of target RNAs by PIWI-piRNAs have not been identified. Here, we show that GTSF1, an essential factor for retrotransposon silencing in male germ cells in mice, associates with both MILI and MIWI2, mouse PIWI proteins that function in prospermatogonia. GTSF1 deficiency leads to a severe defect in the production of secondary piRNAs, which are generated from target RNAs of PIWI-piRNAs. Furthermore, in Gtsf1 mutants, a known target RNA of PIWI-piRNAs is left unsliced at the cleavage site, and the generation of secondary piRNAs from this transcript is defective. Our findings indicate that GTSF1 is a crucial factor for the slicing of target RNAs by PIWI-piRNAs and thus affects secondary piRNA biogenesis in prospermatogonia.