Small non-coding RNAs (sRNAs) such as microRNAs (miRNAs), small interfering RNAs (siRNAs) and piwi-interacting RNAs (piRNAs) regulate the levels of endogenous, viral and transposable element RNA in plants (excluding piRNAs) and animals. These pathways are explored mainly in bilaterian animals, such as vertebrates, arthropods and nematodes, where siRNAs and piRNAs, but not miRNAs bind their targets with a perfect match and mediate the cleavage of the target RNA. Methylation of the 3′ ends of piRNAs and siRNAs by the methyltransferase HEN1 protects these sRNAs from degradation. There is a noticeable selection in bilaterian animals against miRNA-mRNA perfect matching, as it leads to the degradation of miRNAs. Cnidarians (sea anemones, corals, hydroids and jellyfish), are separated from bilaterians by more than 600 million years. As opposed to bilaterians, cnidarian miRNAs frequently bind their targets with a nearly perfect match. Knowing that an ortholog of HEN1 is widely expressed in the sea anemone Nematostella vectensis, we tested in this work whether it mediates the stabilization of its sRNAs. We show that the knockdown of HEN1 in Nematostella results in a developmental arrest. Small RNA sequencing revealed that the levels of both miRNAs and piRNAs drop dramatically in the morphant animals. Moreover, knockdown experiments of Nematostella Dicer1 and PIWI2, homologs of major bilaterian biogenesis components of miRNAs and piRNAs, respectively, resulted in developmental arrest similar to HEN1 morphants. Our findings suggest that HEN1 mediated methylation of sRNAs reflects the ancestral state, where miRNAs were also methylated. Thus, we provide the first evidence of a methylation mechanism that stabilizes miRNAs in animals, and highlight the importance of post-transcriptional regulation in non-bilaterian animals. Plants and animals use small RNAs to regulate gene expression, virus silencing and genomic integrity. These functions depend on specific binding of small RNAs to longer RNA targets. The methyltransferase HEN1 plays a crucial role in stabilizing small RNAs upon their binding to perfectly-matching targets. Lack of methylation in case of a perfect match will lead to small RNA degradation. In general, methylation of microRNAs, a class of small RNAs, is part of their biogenesis in plants, but not in bilaterian animals such as vertebrates, worms and insects, where perfectly-matching microRNA targets are rare. In contrast, in Cnidaria (sea anemones, corals and jellyfish), the sister group to Bilateria, microRNAs frequently bind their targets with a nearly perfect match. In this study, we show that in the cnidarian Nematostella vectensis methylation of microRNAs and other small RNAs is consistent and frequent throughout development and that knockdown of the cnidarian HEN1 results in a developmental arrest. Small RNA sequencing of the treated animals, reveals that small RNAs are depleted and shortened. Therefore, our findings suggest that HEN1-mediated methylation of small RNAs was present in the last common ancestor of Cnidaria and Bilateria 600 million years ago and was responsible for microRNA stabilization.