The protist Trypanosoma brucei possesses a single Argonaute gene called TbAGO1 that is necessary for RNAi silencing. We previously showed that in strain 427, TbAGO1 knock-out leads to a slow growth phenotype and to chromosome segregation defects. Here we report that the slow growth phenotype is linked to defects in segregation of both large and mini-chromosome populations, with large chromosomes being the most affected. These phenotypes are completely reversed upon inducible re-expression of TbAGO1 fused to GFP, demonstrating their link with TbAGO1. Trypanosomes that do not express TbAGO1 show a general increase in the abundance of transcripts derived from the short retroposon RIME (Ribosomal Interspersed Mobile Element). Supplementary large RIME transcripts emerge in the absence of RNAi, a phenomenon coupled to the disappearance of short transcripts. These fluctuations are reversed by inducible expression of GFP::TbAGO1. Furthermore, we use a combination of Northern blots, RT-PCR and sequencing to reveal that RNAi controls expression of transcripts derived from RHS (Retrotransposon Hot Spot) pseudogenes (RHS genes with retro-element(s) integrated within their coding sequence). Absence of RNAi also leads to an increase of steady-state transcripts from regular RHS genes (those without retro-element), indicating a role for pseudogene in control of gene expression. However, analysis of retroposon abundance and arrangement in the genome of multiple clonal cell lines of TbAGO1-/- failed to reveal movement of mobile elements despite the increased amounts of retroposon transcripts.