Small RNAs called PIWI-interacting RNAs (piRNAs) act as an immune system to suppress transposable elements in the animal gonads. A poorly understood adaptive pathway links cytoplasmic slicing of target RNA by the PIWI protein MILI to loading of target-derived piRNAs into nuclear MIWI2. Here we demonstrate that MILI slicing generates a 16-nt by-product that is discarded and a pre-piRNA intermediate that is used for phased piRNA production. The ATPase activity of Mouse Vasa Homolog (MVH) is essential for processing the intermediate into piRNAs, ensuring transposon silencing and male fertility. The ATPase activity controls dissociation of an MVH complex containing PIWI proteins, piRNAs, and slicer products, allowing safe handover of the intermediate. In contrast, ATPase activity of TDRD9 is dispensable for piRNA biogenesis but is essential for transposon silencing and male fertility. Our work implicates distinct RNA helicases in specific steps along the nuclear piRNA pathway.