DNA methylation is a conserved epigenetic mark in plants and mammals. In Arabidopsis, DNA methylation can be triggered by small interfering RNAs (siRNAs) through an RNA-directed DNA methylation (RdDM) pathway. Here, we report the identification of an RdDM effector, KTF1. Loss-of-function mutations in KTF1 reduce DNA methylation and release the silencing of RdDM target loci without abolishing the siRNA triggers. KTF1 has similarity to the transcription elongation factor SPT5 and contains a C-terminal extension rich in GW/WG repeats. KTF1 colocalizes with ARGONAUTE 4 (AGO4) in punctate nuclear foci and binds AGO4 and RNA transcripts. Our results suggest KTF1 as an adaptor protein that binds scaffold transcripts generated by Pol V and recruits AGO4 and AGO4-bound siRNAs to form an RdDM effector complex. The dual interaction of an effector protein with AGO and small RNA target transcripts may be a general feature of RNA-silencing effector complexes.