Canonical primary microRNA (miRNA) transcripts and mirtrons are proposed to transit distinct nuclear pathways en route to generating mature approximately 22 nucleotide regulatory RNAs. We generated a null allele of Drosophila pasha, which encodes a double-stranded RNA-binding protein partner of the RNase III enzyme Drosha. Analysis of this mutant yielded stringent evidence that Pasha is essential for the biogenesis of canonical miRNAs but is dispensable for the processing and function of mirtron-derived regulatory RNAs. The pasha mutant also provided a unique tool to study the developmental requirements for Drosophila miRNAs. While pasha adult somatic clones are similar in many respects to those of dicer-1 clones, pasha mutant larvae revealed an unexpected requirement for the miRNA pathway in imaginal disc growth. These data suggest limitations to somatic clonal analysis of miRNA pathway components.