During RNA interference and related gene regulatory pathways, the endonuclease Dicer cleaves precursor RNA molecules to produce microRNAs (miRNAs) and short interfering RNAs (siRNAs). Human cells encode a single Dicer enzyme that can associate with two different double-stranded RNA (dsRNA)-binding proteins, protein activator of PKR (PACT) and trans-activation response RNA-binding protein (TRBP). However, the functional redundancy or differentiation of PACT and TRBP in miRNA and siRNA biogenesis is not well understood. Using a reconstituted system, we show here that PACT and TRBP have distinct effects on Dicer-mediated dsRNA processing. In particular, we found that PACT in complex with Dicer inhibits the processing of pre-siRNA substrates when compared with Dicer and a Dicer–TRBP complex. In addition, PACT and TRBP show non-redundant effects on the production of different-sized miRNAs (isomiRs), which in turn alter target-binding specificities. Experiments using chimeric versions of PACT and TRBP suggest that the two N-terminal RNA-binding domains of each protein confer the observed differences in dsRNA substrate recognition and processing behavior of Dicer–dsRNA-binding protein complexes. These results support the conclusion that in humans, Dicer-associated dsRNA-binding proteins are important regulatory factors that contribute both substrate and cleavage specificity during miRNA and siRNA production.