Transcripts possessing a 5'-triphosphate are a hallmark of viral transcription and can trigger the host antiviral response. 5'-triphosphates are also found on common host transcripts transcribed by RNA polymerase III (RNAP III), yet how these transcripts remain non-immunostimulatory is incompletely understood. Most microRNAs (miRNAs) are 5'-monophosphorylated as a result of sequential endonucleolytic processing by Drosha and Dicer from longer RNA polymerase II (RNAP II)-transcribed primary transcripts. In contrast, bovine leukemia virus (BLV) expresses subgenomic RNAP III transcripts that give rise to miRNAs independent of Drosha processing. Here, we demonstrate that each BLV pre-miRNA is directly transcribed by RNAP III from individual, compact RNAP III type II genes. Thus, similar to manmade RNAP III-generated short hairpin RNAs (shRNAs), the BLV pre-miRNAs are initially 5'-triphosphorylated. Nonetheless, the derivative 5p miRNAs and shRNA-generated 5p small RNAs (sRNAs) possess a 5'-monophosphate. Our enzymatic characterization and small RNA sequencing data demonstrate that BLV 5p miRNAs are co-terminal with 5'-triphosphorylated miRNA precursors (pre-miRNAs). Thus, these results identify a 5'-tri-phosphatase activity that is involved in the biogenesis of BLV miRNAs and shRNA-generated sRNAs. This work advances our understanding of retroviral miRNA and shRNA biogenesis and may have implications regarding the immunostimulatory capacity of RNAP III transcripts.,© The Author(s) 2014. Published by Oxford University Press on behalf of Nucleic Acids Research.