In humans a single species of the RNAseIII enzyme Dicer processes both microRNA precursors into miRNAs and long double-stranded RNAs into small interfering RNAs (siRNAs). An interesting but poorly understood domain of the mammalian Dicer protein is the N-terminal helicase-like domain that possesses a signature DExH motif. Cummins et al. created a human Dicer mutant cell line by inserting an AAV targeting cassette into the helicase domain of both Dicer alleles in HCT116 cells generating an in-frame 43-amino-acid insertion immediately adjacent to the DExH box. This insertion creates a Dicer mutant protein with defects in the processing of most, but not all, endogenous pre-miRNAs into mature miRNA. Using both biochemical and computational approaches, we provide evidence that the Dicer helicase mutant is sensitive to the thermodynamic properties of the stems in microRNAs and short-hairpin RNAs, with thermodynamically unstable stems resulting in poor processing and a reduction in the levels of functional mi/siRNAs. Paradoxically, this mutant exhibits enhanced processing efficiency and concomitant RNA interference when thermodynamically stable, long-hairpin RNAs are used. These results suggest an important function for the Dicer helicase domain in the processing of thermodynamically unstable hairpin structures.