The Drosophila argonaute2 (ago2) gene plays a major role in siRNA mediated RNA silencing pathways. Unlike mammalian Argonaute proteins, the Drosophila protein has an unusual amino-terminal domain made up largely of multiple copies of glutamine-rich repeats (GRRs). We report here that the ago2 locus produces an alternative transcript that encodes a putative short isoform without this amino-terminal domain. Several ago2 mutations previously reported to be null alleles only abolish expression of the long, GRR-containing isoform. Analysis of drop out (dop) mutations had previously suggested that variations in GRR copy number result in defects in RNAi and embryonic development. However, we find that dop mutations genetically complement transcript-null alleles of ago2 and that ago2 alleles with variant GRR copy numbers support normal development. In addition, we show that the assembly of the central RNAi machinery, the RISC (RNA induced silencing complex), is unimpaired in embryos when GRR copy number is altered. In fact, we find that GRR copy number is highly variable in natural D. melanogaster populations as well as in laboratory strains. Finally, while many other insects share an extensive, glutamine-rich Ago2 amino-terminal domain, its primary sequence varies drastically between species. Our data indicate that GRR variation does not modulate an essential function of Ago2 and that the amino-terminal domain of Ago2 is subject to rapid evolution.